I always find it amusing when I hear older generations talk about how quicly they paid off their mortgages. First and foremost, interest rates and house prices are very strongly inversely correlated. As the rates fall, house prices go up. If your wage remains the same, but the interest rate drops from 6% to 3% you are left with extra money at the end of every month that you can use to now buy a more expensive house. Sounds good, but, your neighbor and their neighbor are all in the same position, so you bid the house prices up. In the end you get the same house that you would have bought with higher interest rates, and your monthly payments remain virtually unchanged. The difference is that your debt is much higher. Instead of having a $200k mortgage, you have a $300k mortgage. This brings about many problems for the house buyer: to avoid cmhc you now need an extra $20g for the downpayment, land transfer fees are higher, property taxes are higher, and most importantly if you have an extra $1g at the end of each month and put it against the principle, it goes much further on the smaller mortgage than on the higher mortgage. Finally, inflated house prices cause increased pressure on rental rates because no rational investor is going to buy a rental property unless a profit is expected. In short, historically low interest rates are horrifically detrimental to the housing market. The only ones profitting are banks, local gov't, builders, and real estate agents. The idea of having equity in the house you live in is for the most part a myth. You have to live somewhere, so if you sell you $1.2mil house that you paid $600k for 7 years ago, chances are you'll be moving into another house that's in a similar price range which means you are no better off. If you decide to move to a depressed economy, that's a different story.
