adplus-dvertising
Connect with us

Business

You now need to make an extra $18000 to pass the mortgage stress test – The Globe and Mail

Published

 on


A home for sale in Toronto’s Annex neighbourhood is photographed on July 18.Fred Lum/The Globe and Mail

The housing market appears to have cooled in recent weeks, but that doesn’t mean it’s now more affordable to enter the market. In fact, owing to rising interest rates, the opposite is true.

Within the past four months, the average yearly income needed to buy a home on a fixed mortgage with 20 per cent down has climbed by $18,000, according to new data from Ratehub, a loan-comparison website. It determined these numbers by contrasting real estate data from March with June, using the average mortgage rates of Canada’s five largest banks.

In Vancouver, would-be homebuyers must now take home a minimum of $232,000 a year to afford a home, an increase of almost $32,000 since March. To purchase a home in Toronto, Ratehub.ca says people need to make roughly $226,000 a year, an additional $16,000 in four months time.

300x250x1

Monthly payments on variable-rate mortgages could increase as borrowers near their ‘trigger rate’

What is your mortgage trigger rate? This calculator helps you estimate it

The greatest increase since March occurred in Victoria, where the minimum annual income to afford a home, on average, is pegged at $188,000 – ballooning by 23 per cent, or about $36,000.

The mortgage stress test is to blame for these large jumps. As concerns over inflation have pushed mortgage rates up in recent weeks, the threshold required to pass the government-mandated mortgage stress test has also risen, making homeownership even less attainable to many Canadians.

The stress test was first introduced during the 2016-2017 housing boom to ensure that homebuyers could afford their mortgage payments if interest rates rose, as well as to slow the frenetic markets in Toronto and Vancouver.

Interestingly, despite the notion that home prices have declined in markets across the country in the wake of rising interest rates, Ratehub found that among the 10 cities it assessed, only half saw their average home prices shrink between March and June.

”Home prices will need to drop significantly in order to neutralize the effects that higher mortgage rates have on the stress test,” said James Laird, co-CEO of Ratehub. “Unless this happens, home affordability will continue to be impacted significantly by the current rising rate environment.”


Change in annual income required

to buy a home in Canada

New analysis from Ratehub.ca, a loan-comparison website, shows it’s now more expensive to buy a home in Canada than it was a few months ago, despite the fact that the housing market has significantly slowed in many parts of the country. Rising mortgage rates – which have, in turn, caused stress-test rates to tick up – are to blame.

Select cities, June, 2022

Income req.

Increase from March, 2022

% increase

Data are based on: 20 per cent down payment, 25-year amortization, $4,000

annual property taxes and $150 monthly heating; mortgage rates average of

the Big Five banks’ five-year fixed rates in March and June; average home

prices from CREA MLS home price index.

the globe and mail, Source: ratehub.ca

Change in annual income required

to buy a home in Canada

New analysis from Ratehub.ca, a loan-comparison website, shows it’s now more expensive to buy a home in Canada than it was a few months ago, despite the fact that the housing market has significantly slowed in many parts of the country. Rising mortgage rates – which have, in turn, caused stress-test rates to tick up – are to blame.

Select cities, June, 2022

Income req.

Increase from March, 2022

% increase

Data are based on: 20 per cent down payment, 25-year amortization, $4,000

annual property taxes and $150 monthly heating; mortgage rates average of

the Big Five banks’ five-year fixed rates in March and June; average home

prices from CREA MLS home price index.

the globe and mail, Source: ratehub.ca

Change in annual income required to buy a home in Canada

New analysis from Ratehub.ca, a loan-comparison website, shows it’s now more expensive to buy a home in Canada than it was a few months ago, despite the fact that the housing market has significantly slowed in many parts of the country. Rising mortgage rates – which have, in turn, caused stress-test rates to tick up – are to blame.

Select cities, June, 2022

Income required

Increase from March, 2022

% increase

Data are based on: 20 per cent down payment, 25-year amortization, $4,000 annual property taxes and

$150 monthly heating; mortgage rates average of the Big Five banks’ five-year fixed rates in March and

June; average home prices from CREA MLS home price index.

the globe and mail, Source: ratehub.ca

As of last June, the stress test requires potential buyers to prove that they can keep up with mortgage payments at either a minimum rate of 5.25 per cent or their individual mortgage rate plus 2 per cent –whichever is higher.

With historically low interest rates, that meant the stress-test rate was almost universally set at 5.25 per cent for people seeking both variable and fixed-rate mortgages, which appear, by far, to be the most popular option in Canada.

But now that fixed-mortgage rates have increased by two-thirds in only four months, according to Ratehub, many hoping to buy with a fixed rate are facing stress-test rates around 7.21 per cent, on average.

John Pasalis, president of a Toronto-based real estate brokerage called Realosophy Realty, played down the significance of these changes. Most buyers, he said, are now opting for variable-rate mortgages because their stress-test rates are now closer to 6 per cent.

Rising mortgage rates add layers of stress to home ownership

Dave Larock strongly disagrees. The president of Integrated Mortgage Planners Inc., a Toronto firm, told The Globe and Mail these numbers highlight a major regulatory misstep by the Office of the Superintendent of Financial Institutions (OSFI), the independent federal agency that oversees the mortgage stress test.

“There should never be a point where a borrower can borrow more if they take a variable rate versus a fixed rate,” Mr. Larock said. “That’s a flaw in the design of the stress test.”

It’s now easier for the most stretched borrowers to qualify for variable-rate mortgages, according to Mr. Larock. OSFI should have addressed this problem at its previous meeting in late June, he added.

“As a banking regulator whose stated goal is to preserve the stability of the market, that was a glaring mistake,” he said.

Mr. Larock, who said he firmly supported the implementation of a stress test, went on to question whether it’s still necessary with rates as high as they are now. If it’s to remain, he said OSFI should set a single stress-test rate for all would-be homebuyers.

With a report from Rachelle Younglai

Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes, listen to our award-winning Stress Test podcast.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Business

A Game-Changing Factor to Job Search: Your Ability to Make Human Connections

Published

 on

human connections

This column will be a departure from my usual job-searching topics to focus on something crucial to a successful job search and your career momentum, especially when networking and interviewing: making human connections.

“The most important things in life are the connections you make with others.” – Tom Ford, American fashion designer.

Genuine human connections lead to positive energy exchange and trust building. Since most job search activities involve interacting with people, projecting positive energy and being seen as trustworthy greatly benefits you.

According to American psychologist Abraham Maslow’s Hierarchy of Needs, love and belonging are the most essential needs we must fulfill, besides food, water, and safety. We are more fulfilled when our needs for love and belonging are met.

300x250x1

We live busy lives, juggling work, family responsibilities, self-care, side hustles, and more. Therefore, often our social connections fall by the wayside. You might not think connecting with others is important, but it is. Social connections can lower anxiety and depression, help regulate emotions, increase self-esteem and empathy, and improve your immune system. These are huge pluses when job hunting.

Sadly, we live in a time when there is a great deal of disconnection. While technology gives the appearance we are more connected than ever, the screens around us disconnect us from nature, ourselves, and those around us. Rather than using technology, especially social media, to enhance our human connections, we use it to replace them.

Being brave, proactive, and taking chances is often required to make human connections. Striking up a conversation with a stranger can be intimidating, requiring you to step out of your comfort zone. Your lowest-hanging fruit is to reconnect with current friends and family. Then venture out and try new activities, such as joining a club or taking classes, to meet people to build a relationship with.

Putting yourself out there will ultimately pay off in the form of a rewarding feeling that comes from building human connections. Here are six simple ways you can create human connections.

 

  1. Surround yourself with people with shared interests.

It is easy to bond with people who share your interests and hobbies. Identifying commonalities between your interviewer and yourself is the most straightforward way to bond with your interviewer, which will give you a competitive advantage.

Do you love reading? Join a local book club. Are you a runner? Join a running club. Go where people who share your interests and beliefs are, such as clubs, volunteering, sports, taking classes, church, or sitting on an advisory board.

 

  1. Overcome your resistance.

Building relationships is often intimidating because of a natural fear of rejection. However, to make human connections, you must overcome your limiting beliefs causing your resistance to change, and embrace situations outside your comfort zone.

The best way I know how to lower your anxiety when meeting new people is to remember showing interest is a massive gesture to anyone you meet. Therefore ask open-ended questions about the other person and make your discussion all about them.

TIP: When meeting someone for the first time, ask yourself, “How can I help this person?”

 

  1. Smile and give off a positive attitude.

People prefer positive emotions to negative ones when forming a social connection; therefore, first impressions count.

A positive demeanor and a genuine smile will naturally draw people to you. Before spending time with others, I find doing a gratitude exercise and taking a few minutes to reflect on the good things in my life helpful in creating a positive attitude.

Putting your best self forward will maximize your chances of being a people magnet.

 

  1. Open up.

If you want to make friends more easily, allow yourself to be more vulnerable with others. This does not mean dropping all filters or boundaries. Too much, too soon, can put people off. On the other hand, you do not want to be an overly edited version of yourself and thus come across as not being authentic.

People can sense whether or not someone is genuine, so let them see the most authentic version of you. Your vulnerability will also prompt them to feel comfortable around you and connect with you on a deeper level.

 

  1. Do not hide behind your phone.

In social situations where you are uncomfortable, hiding behind your phone is easy, preventing you from making real-life connections.

Being on your phone during a party or networking event makes you less approachable. Whenever you are out, focus on being present and engaging with the people around you.

 

  1. Stay in touch.

Human connections need to be nurtured. Regular contact deepens your connections.

If you make a new friend, keep in touch with them and grow your friendship. Likewise, maintain your existing relationships with friends, family, and colleagues by keeping in touch.

Making and maintaining human connections is an activity you should prioritize if for no other reason than the fact that opportunities (e.g., jobs, friendships, love) exist all around you; the only caveat is they are connected to people. Therefore, the more people you are connected to, the more opportunities you will be exposed to.

_________________________________________________________

 

Nick Kossovan, a well-seasoned veteran of the corporate landscape, offers “unsweetened” job search advice. You can send Nick your questions to artoffindingwork@gmail.com.

Continue Reading

Business

First Citizens acquires troubled Silicon Valley Bank

Published

 on

North Carolina-based First Citizens will buy Silicon Valley Bank, the tech industry-focused financial institution that collapsed earlier this month, rattling the banking industry and sending shockwaves around the world.

The deal could reassure investors at a time of shaken confidence in banks, though the Federal Deposit Insurance Corp. and other regulators had already taken extraordinary steps to head off a wider banking crisis by guaranteeing that depositors in SVB and another failed U.S. bank would be able to access all of their money.

Customers of SVB will automatically become customers of First Citizens, which is headquartered in Raleigh. The 17 former branches of SVB will open as First Citizens branches Monday, the FDIC said.

European shares opened higher Monday, with German lender Commerzbank AG up 2.4% and BNP Paribas up 1.2%.

300x250x1

Investors worry that other banks also may crumble under the pressure of higher interest rates. On Friday, much of the focus was on Deutsche Bank, whose stock tumbled 8.5% in Germany, though it was back up about 3.6% in early trading Monday. Earlier this month, shares of and faith in Swiss bank Credit Suisse fell so much that regulators brokered a takeover of by rival UBS.

In the U.S., SVB, based in Santa Clara, California, collapsed March 10 after depositors rushed to withdraw money amid fears about the bank’s health. It was the second-largest bank collapse in U.S. history after the 2008 failure of Washington Mutual. Two days later, New York-based Signature Bank was seized by regulators in the third-largest bank failure in the U.S.

In both cases, the government agreed to cover deposits, even those that exceeded the federally insured limit of $250,000, so depositors were able to access their money.

New York Community Bank agreed to buy a significant chunk of Signature Bank in a $2.7 billion deal a week ago, but the search for a buyer for SVB took longer.

The sale announced late Sunday involves the sale of all deposits and loans of SVB to First-Citizens Bank and Trust Co., the FDIC said.

The acquisition gives the FDIC shares in First Citizens worth $500 million. Both the FDIC and First Citizens will share in losses and the potential recovery on loans included in a loss-share agreement, the FDIC said.

First Citizens Bank was founded in 1898 and says it has more than $100 billion in total assets, with more than 500 branches in 21 states as well as a nationwide bank. It reported net profit of $243 million in the last quarter. It is one of the top 20 U.S. banks and says it is the largest family-controlled bank in the country.

728x90x4

Source link

Continue Reading

Business

Shoppers Drug Mart moves away from medical cannabis, will send patients to Avicanna

Published

 on

TORONTO –

Shoppers Drug Mart Inc. is moving away from its medical cannabis distribution business and preparing to transfer patients to a platform run by biopharmaceutical company Avicanna Inc.

The pharmacy chain owned by Loblaw Companies Ltd. announced the shift Tuesday, but did not say what prompted the change or how much money Toronto-based Avicanna is paying for Shoppers to refer patients to its MyMedi.ca platform.

“We are grateful for the trust placed in us by our medical cannabis patients over the past few years, and are confident we’ve found the right partner in Avicanna to continue to support them,” said Jeff Leger, Shoppers’ president, in a statement.

300x250x1

His company will start to send customers to Avicanna’s platform in early May, with all of the patients set to be off-loaded from Shoppers’ medical pot service by the end of July. Customers will be able to place orders on Shoppers’ website through the transition period.

Avicanna said it will offer a similar range of products including various formats, brands and “competitive pricing.” Like Shoppers, its online medical portal will strive to educate customers around harm reduction and provide specialty services for distinct patient groups like veterans.

Shoppers first launched its medical cannabis business in Ontario in January 2019, months after recreational pot was legalized in Canada (medical pot was legalized in Canada in 2001) at a time when many predicted the weed sector would be booming in the coming years.

The sector has instead struggled with profitability and as high numbers of recreational cannabis shops cluster in several cities, many retailers and licensed producers have had to drop their prices to stay competitive.

However, Shoppers said it racked up tens of thousands of patients in its four years of existence, providing them with access to cannabis from more than 30 brands including Aphria Inc., Hexo Corp.’s Redecan and the Green Organic Dutchman.

Shoppers’ medical cannabis patients were required to obtain a prescription from a licensed health care provider such as a doctor to begin ordering pot from the company, which shipped orders to their homes.

But the company was unhappy with how medical pot regulations limited its model. Shoppers claimed Tuesday that medical cannabis remains the only medication that is not dispensed in pharmacies.

“As we move away from medical cannabis distribution, we remain firm in our belief that this medication should be dispensed in pharmacies like all others and will continue our advocacy to that end,” said Leger.

Avicanna’s statement did not outline its feelings on the matters, but its chief executive said it was “motivated” to “put our full efforts toward advancing medical cannabis and its incorporation into the standard of care.”

“We are thankful to be selected as the partner for this transition and look forward to introducing MyMedi.ca, supporting patients and providing them with continuity of care,” said Avicanna chief executive Aras Azadian in a statement.

This report by The Canadian Press was first published March 28, 2023

728x90x4

Source link

Continue Reading

Trending