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Canadians have record-high mortgage debt. What happens when rates rise? – CBC.ca

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New numbers from Equifax this week confirmed what housing market watchers have known for a while now: Canadians are addicted to mortgage debt. 

Canadians took out 410,000 home loans in the second quarter. That’s the biggest quarterly jump on record, up 60 per cent compared with the same period a year earlier.

Despite fears in the early days of the pandemic that COVID-19 could be a bucket of ice on Canada’s housing market, the opposite happened. Interest rates slashed to record lows, coupled with millions of Canadians cooped up at home suddenly needing more living space, acted more like gasoline on the housing market than water.

The average price of a Canadian resale home topped $716,000 in March. While average prices have come down a little since then, they’re still well ahead of where they were before the pandemic.

Prices that go up forever may make homeowners sleep soundly in their heavily leveraged bedrooms, but many of those paper gains are built on a foundation of debt.

There aren’t just more mortgages than ever out there — they’re also bigger than ever, too. The average new home loan was for $355,000 during the quarter, Equifax says. That’s also the highest level on record, and an increase of 20 per cent compared with where we were a year ago.

All in all, Canadians now owe more than $2.15 trillion in consumer debt, more than the value of Canada’s entire economy.

Rebecca Oakes with Equifax told CBC News that this surge of new home loans could become a problem if and when rates rise.

“A small movement in interest rates can actually do quite a large increase in what a consumer needs to [come up with] in terms of those payments,” she said. “That’s kind of why we’re a little bit concerned.”

The rent vs. buy conundrum

Adam Eljerbi owns a number of homes in London, Ont., half of which he bought in the past year alone. In an interview, he said he thinks buyers in some markets may be getting in over their heads because of a need to “keep up with the Joneses,” as he put it.

“There’s a lot of speculative behaviour,” he said. “There’s a lot of, hey, homes only go up in value.”

Eljerbi has roughly $2 million in mortgage debt to his name on his properties, but he isn’t particularly worried about rising rates — or falling prices, for that matter — because he doesn’t live in any them, or depend on them going up in value.

He’s a landlord, and makes his money fixing up homes in disrepair and renting them to reliable tenants: students.

He lives frugally, in his parents’ home in Barrie, Ont., about 250 kilometres from his stable of income properties. Despite never having taken in a six-figure income from his job in the tech sector, he’s amassed a real estate empire worth about $4.5 million.

Even before he lived with his parents, he rented a basement apartment in Toronto while working in finance on Bay Street.

“I was very frugal. I’d pack my lunches. I’m very, very cautious [with] the money that I spend,” he said.

WATCH | Why Canadians need to get over their aversion to renting:

Rent vs buy?

3 days ago

Real estate investor Adam Eljerbi says more people should consider renting their primary residence, since prices in many markets simply don’t add up as an investment. 0:30

Even before the current run-up in prices, buying in Toronto never made sense to Eljerbi, but he’s comfortable with debt on his properties in more affordable markets because the numbers work: buy a fixer-upper, improve the housing stock, find reliable tenants, repeat.

“I’m a big proponent of renting where you live and owning what you can rent,” he said.

Eljerbi knows his way of life isn’t for everyone, but he wishes more people would break free of the cycle of borrowing more and more for something that will make them very little money if all they do is live in it.

“When you look at real estate in general and you look at mortgage debt, a lot of Canadians have taken on a substantial amount of debt and aren’t aware of the fact that most of … it is variable,” he said. “Once they start creeping up those interest rates, even if it’s a fraction, it starts to weigh on your cash flow.”

In over their heads?

But not everyone thinks Canada has a mortgage debt problem. Sherry Cooper, chief economist with Dominion Lending Centres, thinks the alarmism over growing mortgage debt gives a warped view of reality.

Delinquency rates are near all-time lows, she notes, which suggests the vast majority of people haven’t gotten in over their heads. She also notes that nearly half of all Canadian homeowners don’t have a mortgage on their homes, and recent changes to the stress test rules, which make it harder to qualify for a home loan, have raised the safety bar for everyone else who’s managed to buy in.

“Most Canadians are forced to qualify under even more stringent stress testing than before, substantially above their actual mortgage rate,” Cooper said. “Even if rates were to rise 2.5 percentage points, they are qualified to pay them at that level.”

Cooper says on the whole, she’s not too worried about new buyers who are contributing to that eye-popping $2 trillion debt figure, because they’ve proven their finances are more than healthy enough to withstand it.

She said the pandemic has been an “extraordinary period” for Canada’s economy, and “the proportion of the population that has been able to qualify for loans, those are the people that still have jobs.”

“It’s not the people that are living on government employee compensation,” she said. “So I don’t see this as a problem going forward.”

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Trudeau warns Canadians against splitting vote in dead heat federal election – Global News

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With the Canadian election in a dead heat two days before the Sept. 20 vote, Liberal Leader Justin Trudeau and his Conservative rival implored supporters to stay the course and avoid vote splitting that could hand their opponent victory.

Both men campaigned in the same seat-rich Toronto region on Saturday as they tried to fend off voter defections to the left-leaning New Democratic Party (NDP) and the populist People’s Party of Canada (PPC), both of which are rising in polls.

The latest Sondage Leger poll conducted for the Journal de Montreal and the National Post newspapers put the Conservatives one percentage point ahead of Trudeau’s Liberals, with 33 per cent over 32 per cent. The NDP was at 19 per cent while the PPC was at 6 per cent.

Read more:
Trudeau open to electoral reform, says he is a fan of ranked ballots

Trudeau, 49, called an early election, seeking to convert approval for his government’s handling of the pandemic into a parliamentary majority. But he is now scrambling to save his job, with Canadians questioning the need for an early election amid a fourth pandemic wave.

“Despite what the NDP likes to say, the choice is between a Conservative or a Liberal government right now,” Trudeau said in Aurora, Ontario. “And it does make a difference to Canadians whether we have or not a progressive government.”

Trudeau has spent two of the final three days of his campaign in Ontario where polls show the NDP could gain seats, or split the progressive vote.

A tight race could result in another minority government, with the NDP, led by Jagmeet Singh, playing kingmaker. It has also put a focus on turnout, with low turnout historically favouring the Conservatives.


Click to play video: 'Liberals trying to get supporters to vote'



1:51
Liberals trying to get supporters to vote


Liberals trying to get supporters to vote

With polls suggesting a Liberal minority may be the most likely result on Monday, Trudeau was pressed on whether this could be his last election. He responded: “There is lots of work still to do, and I’m nowhere near done yet.”

If voters give Trudeau a third term, everything they dislike about him “will only get worse,” Conservative leader Erin O’Toole told supporters on Saturday, saying his party was the only option for anyone dissatisfied with the Liberals, in a dig at the PPC.

The PPC, which has channeled anger against mandatory vaccines into surprising support, could draw votes away from the Conservatives in close district races, helping the Liberals eke out a win.

On Saturday, the Liberals announced they would drop a candidate over a 2019 sexual assault charge that the party said was not disclosed to them. Kevin Vuong, a naval reservist running in an open Liberal seat in downtown Toronto, denied the allegations on Friday, noting the charge was withdrawn.

Read more:
Canada Election: Black, Indigenous voters lament leaders shying away from race-based issues

“Mr. Vuong will no longer be a Liberal candidate, and should he be elected, he will not be a member of the Liberal caucus,” the party said in a statement on Saturday.

Earlier this month, Liberal member of parliament Raj Saini ended his re-election campaign amid allegations of inappropriate behaviour towards female staffers.

O’Toole, 48, campaigned in Saini’s district on Saturday, one of three Liberal ridings he is hoping to swing his way. Earlier, he appeared in a Conservative-held riding west of Toronto that was closely fought during the 2019 election.

The area’s member of Parliament, who is not running again, came under fire last spring for saying COVID-19 lockdowns were the “single greatest breach of our civil liberties since the internment camps during WW2.”

O’Toole, who said he wants to get 90 per cent of Canadians vaccinated, has refused to say who among Conservative Party candidates were.

© 2021 Reuters

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'Really frustrating': Racialized people feel ignored in federal election campaign – CTV News

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TORONTO —
Given recent racist attacks in the country and racism hurled at campaigning candidates, racialized people living in Canada say they’re concerned that systemic racism hasn’t been at the forefront of any of the party leaders’ messages.

Some almost 8 million Indigenous, Black and people of colour living in Canada, making up 22 per cent of Canada’s population, are wondering why there hasn’t been more focus on racism and issues of race during the election campaign.

“I’m a woman of colour every day of my life, I don’t get to turn that off,” Samanta Krishnapillai, founder, executive director and editor-in-chief of On Canada Project, an Instagram account that shares information targeted towards Canada’s millennial and Generation Z populations, told CTV News.

She said she had hoped that systemic racism in Canada would be more central to all of the candidates’ campaigns.

“I think that is really frustrating to see,” she said.

For Krishnapillai, she feels as though the issues that impact people of colour haven’t been seen as crucial during the election campaign.

“The fact that there are party leaders that are able to just move on from this subject and not constantly have it as part of what they’re talking about kind of sucks … It’s not like our experiences aren’t as important,” she said.

Not only is Krishnapillai not seeing these important conversations about race, she’s also not seeing the issues of young Canadians reflected in the election campaigns.

“People keep saying, ‘young people don’t vote.’ What are you doing to get me to come vote? What are you talking about to get me to care, to get people like me to care?” she said. “It’s just been a really lackluster election.”

And she’s not willing to accept the answer that it’s “just politics.”

“Why is that what we accept as politics, if you know that you can do better, why aren’t you? You shouldn’t have to wait until someone dies or bodies are recovered to do it,” Krishnapillai said.

When Justin Trudeau was elected prime minister in 2015, Krishnapillai said she was excited. She saw a feminist leader who was going to make change, but she sees things differently now.

“I think he’s capable of greatness, but I also feel like, it just feels so performative and it doesn’t feel genuine,” she said.

That’s especially true, she said, after the death of George Floyd in the U.S. kicked off protests across Canada last year in response to police violence against Black and Indigenous people here. This year, meanwhile, thousands of unmarked graves at former residential schools were brought to light, and a family in London, Ont. was killed because – according to police – they were walking while Muslim.

“It really could have been, it could have been my mother,” Sarah Barzak, executive director of the London School of Racialized Leaders, told CTV News.

Barzak said that she experienced racism in Canada since she was a child, with other kids telling her: “‘go back to your country,’ – like, I heard that a lot as a child.”

She said she is disappointed that while politicians turned out to a memorial for the family killed in London in June, they have since gone silent on Islamophobia in the country, and systemic racism in general.

“They came, they took the mic, they took all their photo ops, and then they left,” she said.

The candidates have spoken about diversity in Canada, but Barzak said just talking about it isn’t enough.

“I don’t think it’s enough to just say things like ‘diversity is our strength’, when hate crimes are clearly on the rise and there just isn’t enough funding and enough push back,” she said.

And some forms of racism she says have gone unmentioned by the candidates on the campaign trail.

“I haven’t heard any of the leaders discuss anti-Asian racism, and that has also been on the rise in relation to COVID and xenophobia and anti-Asian sentiment,” Barzak said.

After a tumultuous 18 months in which marginalized and racialized communities were hit harder by the COVID-19 pandemic, Barzak said it is time for the candidates to address these issues.

“Every marginalized community has really gone through the gutters, especially under this pandemic and I don’t think there are excuses anymore,” she said. “I think even just acknowledging it is the bare minimum.”

Barzak said she is disappointed that issues of race haven’t been central to the candidates’ election campaigns, and she doesn’t think she’s alone in this feeling.

“I look at leadership and I’m just shaking my head,” said Barzak. “This isn’t leadership, this is failure to me, and I think this is failure to a lot of people across the country.”

“This is systemic neglect,” she added.

Some voters were hoping for more, especially after politicians took a knee with protestors last summer.

“I definitely wish that after the year and a half that we all witnessed, you know, Black issues would be centred a little bit more anti-Blackness and issues particular to the Black community would have been discussed a little bit more,” Danièle-Jocelyne Otou, director of communication and strategic engagement of Apathy is Boring, an organization that aims to get younger Canadians involved in politics and Canadian and global issues told CTV News.

At the English-language leaders debate, where not a single Black person was invited to ask the candidates a question, issues that impact Black Canadians were left unaddressed. The anti-Asian hate that has been on the rise since the COVID-19 pandemic began was also not a topic of discussion.

“I wish that Black voices would have been amplified and highlighted throughout the debate as well. I would have loved to hear from some Asian folks about the last year that they’ve had and the issues that they would like to see moving forward,” she added.

Sometimes leaders do the bare minimum to engage voters, especially younger ones, and Otou says that’s not enough.

“There’s this assumption that all you have to do is one little TikTok meme and you’ll get the youth vote without taking into account, again, youth interests over the last year and a half have drastically changed and they’re paying more attention than ever to Canadian politics,” she said.

Indigenous voters are also feeling left behind, as the federal party leaders have largely ignored the continuing discoveries of unmarked graves on the grounds of former residential schools.

The chief of Serpent River First Nation in Ontario had hoped to see the candidates present real solutions to healing these historical wounds.

“Canada needs to have truth before we can have reconciliation,” said Chief Brent Bissaillion. “We still haven’t gotten to that truth.”

Bissaillion said he feels that issues impacting First Nations, Metis and Inuit in Canada haven’t been central to the parties’ campaigns.

“So it does get swept under the rug, and I feel that a lot of the issues that pertain to indigenous people pertain to a lot of other minorities and marginalized folks, and it is kind of disappointing that it’s gone to the wayside during this campaign,” he said.

With more and more unmarked graves being discovered in the country, Bissaillion reflects on other moments that seemed like a reckoning in Canada.

“We’ve had several reckonings this country continually has reckonings every few years. And we continue to be in the same spot. Everything is symbolic,” he said.

Bissaillion said he would like to hear more about what steps the parties will take to follow through on various promises, and issues that impact First Nations, Metis and Inuit in Canada.

“I’d really like to hear from all parties on how we’re going to start returning land back to our community so that we can take stewardship,” he said.

Krishnapillai, Barzak, Otou and Bissaillion will participate in CTV’s Voters’ Viewpoint panel with CTV’s Your Morning host Anne Marie Mediwake as part of CTV News’ special election coverage. Join the Voters’ Viewpoint conversation online on CTVNews.ca, Facebook, Twitter, Instagram, and TikTok.

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U.S. lawmakers push Biden to lift Canadian travel restrictions

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Four U.S. senators on Friday asked President Joe Biden to lift restrictions that have barred travel by Canadians across the northern U.S. border since March 2020.

Democratic Senators Jeanne Shaheen and Maggie Hassan of New Hampshire, Jon Tester of Montana and independent Angus King of Maine asked Biden to allow Canadians vaccinated against COVID-19 to travel to the United States before October. The border state senators said in a letter the restrictions have led to “economic and emotional strain in our communities.”

The senators added: “A plan with some indication of when your administration would feel comfortable lifting border restrictions based on public health data would provide clarity to businesses and families along the northern border.”

They also noted that Canadians can fly to the United States. “We struggle to understand the public health rationale for the disparate treatment in modes of travel,” the senators wrote.

The White House did not immediately comment on Friday, but White House coronavirus response coordinator Jeff Zients said on Wednesday that given the Delta variant of the coronavirus, “we will maintain the existing travel restrictions at this point.”

U.S. officials and travel industry executives say the White House is set to renew the restrictions before the latest extension expires on Sept. 21.

In August, the United States again extended restrictions closing its land borders with Canada and Mexico to nonessential travel such as tourism despite Ottawa’s decision to open its border to vaccinated Americans.

Canada on Aug. 9 began allowing fully vaccinated U.S. visitors for nonessential travel.

The United States has continued to extend the extraordinary restrictions on Canada and Mexico on a monthly basis since March 2020, when they were imposed to address the spread of COVID-19.

The U.S. land border restrictions do not bar U.S. citizens from returning home.

The United States separately bars most non-U.S. citizens who within the last 14 days have been in the United Kingdom, the 26 Schengen countries in Europe without border controls, Ireland, China, India, South Africa, Iran and Brazil.

 

(Reporting by David Shepardson in Washington; Editing by Matthew Lewis)

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