Canadians believe that other people have taken on too much debt or that “a lot of Canadians became homeowners over the last few years who probably should not be homeowners.” But when it comes to their own finances, these same people think they have borrowed responsibly and that real estate is still a good long-term investment.

Although the results seem contradictory, “It might be that the fearful opinions about overall debt have been influenced by statements in the media, more so than by the actual behaviour of Canadians,” says Will Dunning, author of the Annual State of the Residential Mortgage Market from the Canadian Association of Accredited Mortgage Professionals (CAAMP).

The association's research seems to show that media attention about high debt levels has “influenced many Canadians to believe that other people ('but not me') have been irresponsible,” says Dunning in the report.

CAAMP's latest research confirms what the association has been stating for some time: that “a vast majority of Canadians have substantial capacities to avoid higher interest rates.” It asked mortgage holders “the amount at which, if your monthly mortgage payment increased this much, you would be concerned with your ability to make your payments.” The average amount of “wiggle” room is $750 per month on top of current costs.

CAAMP says about 12 per cent of mortgage borrowers say they would have problems if interest rates rose by less than one per cent, but even for this group there are mitigating factors. “Most of them have substantial amounts of housing equity; 88 per cent have 10 per cent or more equity and have potential to call on their equity, either by selling or by refinancing,” says CAAMP. “An estimated 12 per cent, or about 75,000 mortgage holders, have less than 10 per cent equity in their homes.

“For many others, time will be a mitigating factor, as about three-quarters of them have either fixed-rate or combination mortgages: any changes in interest rates will not affect them until their renewal rates,” says the report. By then, they will have seen some income growth and the amount of mortgage principal will have been reduced, making the impact of future rate hikes less than it might be today.

Some facts and figures from the CAAMP report:

Published: November 22, 2011

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Jim Adair is editor of REM: Canada's Real Estate Magazine, a business publication for real estate agents and brokers. He has been writing about Canadian real estate, home building and renovation issues for more than 30 years. You can contact Jim at .