An Interview Of Mr. Connor s The Real Estate Market And...

The report is based on an interview of Mr. Dean Connor, CEO, Sun Life Financial, which addresses a major potential issue in the real estate market. The report shows the concern of Mr. Connor regarding the dynamic real estate market and its effects on the elder Canadians. According to Mr. Connor, the debts on the mortgage should be closed before retirement. The interest rates are apparently increasing and this would decrease the value of real estate business soon. And he is afraid that majority of the Canadians will be affected because most of their assets are tied up in the real estate market. The report concludes by giving a Sun Life Financial survey result which says that, 24% of Canadians are planning to use their home as the primary†¦show more content†¦The following sections discuss about the macro economic impact of the increasing real estate debt on: a. National income b. Consumption, and c. Savings functions of the citizen Effect on Consumption Improved standard of living is one of the major goals of the Macro Economics. And Canada has maintained equilibrium with the income level of its citizens. But with increase in debts, the citizens would not be able to spend. This affects the standard of living and impact the productivity of the individual. If the real estate market does decline, politicians and policy makers are hoping to be the prices level off gradually. An increased interest rate in the near future is predictable and this result in a decline in the real estate market. This includes external factors like an interest rate hike or decline in market that makes mortgage less affordable. In this scenario, the income is stable and the consumption is dynamic. The ability of the individual to spend decreases as there is a huge amount of debt associated with them. Effect on Savings Function The issue also affects the savings function of the citizen badly. Increasing debt reduces the ability of the individual to save for their future. Increasing debt and altered saving functions are the rising concerns in today’s world. Economic experts suggest that the debt payment should go parallel to the emergency and retirement savings. They also point out that having a house with minimal