I'd like to start with that.
I keep hearing about this income-to-debt ratio. For me, that is a red herring.
There are two types of debt in this country. There's good debt and there's bad debt. First off, who knows how that ratio is calculated? I was in a meeting with the CMHC general manager for Atlantic Canada last week. I asked her that question. Frankly, she could not answer it. Her economist took a stab at it. We're still not sure in Atlantic Canada how that ratio is come to.
It's important to recognize there are two types of debt, good debt and bad debt. A housing payment is a good debt as it is a debt for an asset that not only appreciates in value but as you pay down that debt, it creates equity that is tangible. It provides shelter, and it builds net worth when there is a principal or balance reduction.
There are multiple factors considered when granting mortgage financing. Debt ratio, income, assets, income to assets, debt to assets, credit repayment history, credit utilization, income stability, income source, down payment, location, property type, and other qualifying criteria, i.e. the 3% rule on revolving credit. That is a good debt. It goes through a number of checks and balances to ensure that it is property administered and that it is on an asset that appreciates.