![]() ![]() But never again two per cent – unless the economy crashes.īy the way, millions of people are in negative amortization. At that time folks who took five-year fixed-rate sub-3% home loans or 1.5% variable-rate borrowings will face the music. The bulk of mortgage renewals are set for 20, as we previously reported. The most salient part of this is that most of the interest rate pain is yet to come. Central to that in a country with an almost-70% home ownership rate, is two trillion in mortgage debt. The reasons for this misery are food inflation and the increased cost of servicing loans. Just under half admit they stay up at night worrying about how much they’ve borrowed. More angst: 35% say they don’t make enough to pay their overhead. The stat is up 6% from April, even though the official inflation rate is down. In other words, if the cat needs spaying, the power bill doesn’t get paid. ![]() Now a majority – 52% – of Canadians say they’re two hundred bucks or less from financial calamity on a monthly basis. Given the above, the latest report from insolvency firm MNP should be no shocker. It’s been 21 years since we last saw a 7-handle, a few months before Nine Eleven. It added a quarter point last month and does it again tomorrow. Undoubtedly the next RBC quarterly report will be worse. “Deep in crisis territory” with just under 80% of income required to own and carry real estate. We expect the persistence of extreme unaffordability stress to cap the market’s recovery.”Īnd look at Toronto. ![]() The path forward is unlikely to be as robust. Resale activity is up 69% since January, retracing almost half the previous year’s drop and returning close to pre-pandemic levels. Price declines and the pause in interest rates earlier this year got some buyers (and sellers) back in the game this spring. “Owning a home has never been so unaffordable anywhere in Canada except in the previous quarter. The bank calls it “ a full-blown affordability crisis.”īut look at this: carrying a home in Vancouver takes 96.1% of pre-tax household income, says RBC. And even that’s a little cheaper than a few months ago, thanks to temporarily-softer house values. Across this great nation, the average amount of income needed to carry a home – even after a hefty 20% down payment – sits not at 30%, but double that – 59.5%. The major Canadian affordability index is compiled by RBC. Currently we top the civilized world in debt Olympics. The average in GTA/Toronto (6 million) is $1.1 million Cdn.Īs for that 28-33% ratio of income to ownership costs, there’s no context. The median listing price in metro Chicago (8.9 million people), for example, is $359,000 US. The contrast is even more stark when comparing similar cities. That is 21% less than the current Canadian average of $729,000. By the way, the average house price across American is $436,800 US – or $577,000 in beaverbucks. Twenty eight to 33% of pre-tax household income is the outer limit of affordability in America. Stressed-out first-time buyers eager to get on the property ladder might not appreciate this advice, but buying-and owning-a home is so much more expensive than most people realize. Unfortunately, this may mean postponing homeownership or purchasing a cheaper property. This percentage is still too high for many first-time buyers. These payments typically include property taxes, insurance costs, and homeowners association fees. (Hopefully you are seated.)Įxperts recommend that buyers don’t spend more than 28% to about a third of their gross income, which is how much they earn before taxes, on their monthly mortgage payments. It’s an answer to the ‘How much house can I afford?’ question posted on a site run by the American realtor cartel. Yesterday this pathetic blog asked if our current path – into the bowels of epic household and public debt – was sustainable. ![]()
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