Renowned Canadian investor Stephen Jarislowsky is joining the choir of Bay Street voices concerned about housing, saying Canadians taking advantage of low interest rates to get into the market may be in for a rude awakening once these start to rise.

“It's not necessarily a bubble if interest rates stay low indefinitely,” Jarislowsky said in a television interview Friday. “But with all the new money that's been swapped around as a result of the help by governments … If at some point we have to increase interest rates, it's going to be a massive default in mortgages if the mortgages are too high a per cent of today's values.”

Some of Canada’s top economists have recently issued warnings about real estate prices in the country’s hot housing markets, with Rosenberg Research Chief Economist and Strategist David Rosenberg saying that we might currently be in “one of the biggest bubbles of all time.”

The heat in housing hasn’t escaped the watchful eye of central bankers. Bank of Canada Deputy Governor Lawrence Schembri said Thursday the bank is closely monitoring the situation, though he did not indicate it’s planning any action on home prices yet.

Jarislowsky -- best known as the founder and former chairman of Jarislowsky, Fraser Ltd.; which was acquired by Bank of Nova Scotia in 2018 -- said Canadians looking to buy a home now should look for long-duration mortgages with fixed interest rates, rather than variable-rate mortgages, which can be buffeted by rising rates.

]]]]]“Then you'll at least be able to pay the interest on the loan,” he said. “But to repay those loans with the average income and very highly-taxed incomes with high interest rates will be quasi-impossible for many people, especially the ones who have two homes because they moved to the country and at the same time [want] maintain their place in town.”