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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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Virginia Democrats advance efforts to protect abortion, voting rights, marriage equality

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RICHMOND, Va. (AP) — Democrats who control both chambers of the Virginia legislature are hoping to make good on promises made on the campaign trail, including becoming the first Southern state to expand constitutional protections for abortion access.

The House Privileges and Elections Committee advanced three proposed constitutional amendments Wednesday, including a measure to protect reproductive rights. Its members also discussed measures to repeal a now-defunct state constitutional ban on same-sex marriage and ways to revise Virginia’s process to restore voting rights for people who served time for felony crimes.

“This meeting was an important next step considering the moment in history we find ourselves in,” Democratic Del. Cia Price, the committee chair, said during a news conference. “We have urgent threats to our freedoms that could impact constituents in all of the districts we serve.”

The at-times raucous meeting will pave the way for the House and Senate to take up the resolutions early next year after lawmakers tabled the measures last January. Democrats previously said the move was standard practice, given that amendments are typically introduced in odd-numbered years. But Republican Minority Leader Todd Gilbert said Wednesday the committee should not have delved into the amendments before next year’s legislative session. He said the resolutions, particularly the abortion amendment, need further vetting.

“No one who is still serving remembers it being done in this way ever,” Gilbert said after the meeting. “Certainly not for something this important. This is as big and weighty an issue as it gets.”

The Democrats’ legislative lineup comes after Republican Governor Glenn Youngkin, to the dismay of voting-rights advocates, rolled back a process to restore people’s civil rights after they completed sentences for felonies. Virginia is the only state that permanently bans anyone convicted of a felony from voting unless a governor restores their rights.

“This amendment creates a process that is bounded by transparent rules and criteria that will apply to everybody — it’s not left to the discretion of a single individual,” Del. Elizabeth Bennett-Parker, the patron of the voting rights resolution, which passed along party lines, said at the news conference.

Though Democrats have sparred with the governor over their legislative agenda, constitutional amendments put forth by lawmakers do not require his signature, allowing the Democrat-led House and Senate to bypass Youngkin’s blessing.

Instead, the General Assembly must pass proposed amendments twice in at least two years, with a legislative election sandwiched between each statehouse session. After that, the public can vote by referendum on the issues. The cumbersome process will likely hinge upon the success of all three amendments on Democrats’ ability to preserve their edge in the House and Senate, where they hold razor-thin majorities.

It’s not the first time lawmakers have attempted to champion the three amendments. Republicans in a House subcommittee killed a constitutional amendment to restore voting rights in 2022, a year after the measure passed in a Democrat-led House. The same subcommittee also struck down legislation supporting a constitutional amendment to repeal an amendment from 2006 banning marriage equality.

On Wednesday, a bipartisan group of lawmakers voted 16-5 in favor of legislation protecting same-sex marriage, with four Republicans supporting the resolution.

“To say the least, voters enacted this (amendment) in 2006, and we have had 100,000 voters a year become of voting age since then,” said Del. Mark Sickles, who sponsored the amendment as one of the first openly gay men serving in the General Assembly. “Many people have changed their opinions of this as the years have passed.”

A constitutional amendment protecting abortion previously passed the Senate in 2023 but died in a Republican-led House. On Wednesday, the amendment passed on party lines.

If successful, the resolution proposed by House Majority Leader Charniele Herring would be part of a growing trend of reproductive rights-related ballot questions given to voters. Since 2022, 18 questions have gone before voters across the U.S., and they have sided with abortion rights advocates 14 times.

The voters have approved constitutional amendments ensuring the right to abortion until fetal viability in nine states: Arizona, California, Colorado, Maryland, Michigan, Missouri, Montana, Ohio and Vermont. Voters also passed a right-to-abortion measure in Nevada in 2024, but it must be passed again in 2026 to be added to the state constitution.

As lawmakers debated the measure, roughly 18 members spoke. Mercedes Perkins, at 38 weeks pregnant, described the importance of women making decisions about their own bodies. Rhea Simon, another Virginia resident, anecdotally described how reproductive health care shaped her life.

Then all at once, more than 50 people lined up to speak against the abortion amendment.

“Let’s do the compassionate thing and care for mothers and all unborn children,” resident Sheila Furey said.

The audience gave a collective “Amen,” followed by a round of applause.

___

Associated Press writer Geoff Mulvihill in Cherry Hill, New Jersey, contributed to this report.

___

Olivia Diaz is a corps member for The Associated Press/Report for America Statehouse News Initiative.

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Vancouver Canucks winger Joshua set for season debut after cancer treatment

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Vancouver Canucks winger Dakota Joshua is set to make his season debut Thursday after missing time for cancer treatment.

Head coach Rick Tocchet says Joshua will slot into the lineup Thursday when Vancouver (8-3-3) hosts the New York Islanders.

The 28-year-old from Dearborn, Mich., was diagnosed with testicular cancer this summer and underwent surgery in early September.

He spoke earlier this month about his recovery, saying it had been “very hard to go through” and that he was thankful for support from his friends, family, teammates and fans.

“That was a scary time but I am very thankful and just happy to be in this position still and be able to go out there and play,,” Joshua said following Thursday’s morning skate.

The cancer diagnosis followed a career season where Joshua contributed 18 goals and 14 assists across 63 regular-season games, then added four goals and four assists in the playoffs.

Now, he’s ready to focus on contributing again.

“I expect to be good, I don’t expect a grace period. I’ve been putting the work in so I expect to come out there and make an impact as soon as possible,” he said.

“I don’t know if it’s going to be perfect right from the get-go, but it’s about putting your best foot forward and working your way to a point of perfection.”

The six-foot-three, 206-pound Joshua signed a four-year, US$13-million contract extension at the end of June.

This report by The Canadian Press was first published Nov. 14, 2024.

The Canadian Press. All rights reserved.

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Trump chooses anti-vaccine activist Robert F. Kennedy Jr. as health secretary

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NEW YORK (AP) — President-elect Donald Trump says he will nominate anti-vaccine activist Robert F. Kennedy Jr. to lead the Department of Health and Human Services, putting him in charge of a massive agency that oversees everything from drug, vaccine and food safety to medical research and the social safety net programs Medicare and Medicaid.

“For too long, Americans have been crushed by the industrial food complex and drug companies who have engaged in deception, misinformation, and disinformation when it comes to Public Health,” Trump said in a post on his Truth Social site announcing the appointment. Kennedy, he said, would “Make America Great and Healthy Again!”

Kennedy, a former Democrat who ran as an independent in this year’s presidential race, abandoned his bid after striking a deal to give Trump his endorsement with a promise to have a role in health policy in the administration.

He and Trump have since become good friends, with Kennedy frequently receiving loud applause at Trump’s rallies.

The expected appointment was first reported by Politico Thursday.

A longtime vaccine skeptic, Kennedy is an attorney who has built a loyal following over several decades of people who admire his lawsuits against major pesticide and pharmaceutical companies. He has pushed for tighter regulations around the ingredients in foods.

With the Trump campaign, he worked to shore up support among young mothers in particular, with his message of making food healthier in the U.S., promising to model regulations imposed in Europe. In a nod to Trump’s original campaign slogan, he named the effort “Make America Healthy Again.”

It remains unclear how that will square with Trump’s history of deregulation of big industries, including food. Trump pushed for fewer inspections of the meat industry, for example.

Kennedy’s stance on vaccines has also made him a controversial figure among Democrats and some Republicans, raising question about his ability to get confirmed, even in a GOP-controlled Senate. Kennedy has espoused misinformation around the safety of vaccines, including pushing a totally discredited theory that childhood vaccines cause autism.

He also has said he would recommend removing fluoride from drinking water. The addition of the material has been cited as leading to improved dental health.

HHS has more than 80,000 employees across the country. It houses the Food and Drug Administration, the Centers for Disease Control and Prevention, the Medicare and Medicaid programs and the National Institutes of Health.

Kennedy’s anti-vaccine nonprofit group, Children’s Health Defense, currently has a lawsuit pending against a number of news organizations, among them The Associated Press, accusing them of violating antitrust laws by taking action to identify misinformation, including about COVID-19 and COVID-19 vaccines. Kennedy took leave from the group when he announced his run for president but is listed as one of its attorneys in the lawsuit.

__ Seitz reported from Washington.

The Canadian Press. All rights reserved.

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