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Canadian homes haven’t been so unaffordable since 1990, and a big bank asks is ownership only for the rich?

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You’d have to go back to the year 1990 to find the last time Canadian homes were so unaffordable for the typical buyer, leading one of the country’s biggest banks to question whether ownership is only for the wealthy now.

According to RBC, which just released its third-quarter analysis of the cost of home ownership, households in Canada need to fork over 53.9 percent of their incomes to afford the average-priced home.

The “main culprit” as RBC sees it is rising interest rates. Mortgage rates have risen for five consecutive quarters as the Bank of Canada has embarked on monetary tightening. The central bank has hiked its overnight rate, which influences the mortgage marketplace, five times since July 2017.

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Homebuyers are most stretched in Vancouver, where it takes an 86.9-percent share of a household’s income for a typical home. Toronto follows as households need to shell out 75.3 percent of their incomes to saddle the cost of ownership.

To rank affordability, RBC looks at what share of a median pre-tax household income would be needed to afford an average-priced home. Calculations assume a 25-percent downpayment and a 25-year mortgage with a five-year fixed rate.

High housing costs in Canada led RBC to ask “are only the rich able to buy a home these days?” The answer, according to the bank: “That certainly looks like it in Canada’s most expensive markets.”

Specifically, RBC highlighted Vancouver, Victoria and Toronto — where buyers need two to three times the median income to even qualify for a mortgage and carry the cost of ownership — for their respective affordability issues.







On top of rising rates, the federal government’s stress testing on uninsured mortgages has further intensified challenges for buyers. In fact, for Vancouverites, the stress test means the minimum qualifying income shot up $36,000. Minimum qualifying incomes in Victoria and Toronto surged $25,000 and $27,000, respectively.

That means that in Vancouver, a household would need to pull in at least $211,000 annually. Meantime in nearby Victoria, the minimum income as $154,000, while for Toronto it was $167,000.

“Thousands of dollars more in income are now needed to buy a home with a mortgage in every market across the country because of the stress test,” says RBC.

RBC doesn’t expect the situation for house hunters will improve meaningfully next year as economists predict two more Bank of Canada rate hikes in 2019. However, RBC isn’t expecting a significant worsening in affordability either. “A generally soft environment for prices and rising household income will contain some of that pressure,” the bank notes.

Of Canada’s major markets, Edmonton was the most attainable market for homeowner hopefuls. There, an average home requires 28.2 percent of the median income for a local household. The next most affordable market was Ottawa, where 38.6 percent of the median household income was needed. Calgary and Montreal followed at roughly 45 percent each.

But the tide seems to be shifting in Montreal. In fact, Montreal’s affordability measure worsened the most of any market RBC tracked last quarter. The share of household income needed to afford a home in Montreal increased by a whole percentage point from the previous quarter.

“The area has been one of the stronger markets in Canada in the past year—another being Ottawa—that saw solid price gains amplify the effect of higher interest rates on ownership costs,” says RBC. “Despite some deterioration in the latest period, owning a home remains affordable in the majority of other markets in Canada.”

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New home? Prepare for the unexpected

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(NC) Buying a house, getting married or having your first baby are all major life events that are likely to affect your finances. But whether you’re in the midst of a major life event or not, it’s important to check in on your finances regularly to maintain good financial health.

Your financial health encompasses things like your spending, savings, borrowing and future financial plans. It also means dedicating a set amount of savings for unexpected future events. It can even include optional credit protection insurance, such as TD protection plans, to help cover your debt balances in case of death, a covered critical illness or total disability.

Even though it can be tough to think about the unexpected, life is unpredictable and it’s important to plan for the unexpected. Find more information at td.com.

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Mortgage pitfalls to avoid

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(NC) Throughout life, you may have moments where you’ll make a large purchase or invest in a costly item, like your family home. But whether you’re in the market for your first new property or already have a mortgage, leaving this asset unprotected can be costly.   

Insuring your housing financial debt, as well as debt for other big-ticket items like a new boat for your lakefront cottage or keepsake jewelry like an engagement ring, is a smart investment in your well-being.

To help protect your debt balances like a mortgage, your bank may have optional credit protection insurance products.

“Your home is one of your biggest assets, yet illness can happen at any stage of life. Worrying about your mortgage when the focus should be on health isn’t a situation anyone would wish for,” explains Shirley Malloy, vice president at TD. “Fortunately, we offer mortgage protection to provide coverage for your outstanding balance should you face a covered critical health event.”

Mortgage protection can be purchased whether you’re in the process of applying for a mortgage or already have a home financing solution. But what about protection options for credit card debt?

“Given the unprecedented circumstances of this year, many Canadians are trying to plan for the unexpected to protect themselves and their finances,” says Malloy. “TD balance protection plus is an optional product designed to help you deal with your credit card payment obligations in the event of a covered event, such as loss of employment.”

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Is your internet too slow? It’s probably not you

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(NC) We all know the aggravation of a school lesson that just won’t stop freezing or the family video call that looks more like a photo montage. And, as we adjust to the impact of COVID-19 on our day-to-day, that slow connection can have frustrating consequences.

Working from home and learning remotely, both need fast, stable internet, something not enough Canadians have yet. Even if you have fast devices in your home, if the infrastructure in your area is not optimal, your connection won’t be either.

Right now, cities have the infrastructure needed to ensure access. But rural and remote communities are hugely underserved, with fewer than half having high-speed internet, and fewer than a third of households on reservations have high-speed connections.

Fortunately, change is coming. The Universal Broadband Fund is backing projects across Canada right now to ensure the reliable, high-speed internet connections families need to work, study, access services online, and safely stay in touch with each other.

The fund existed before COVID, but as a response to the pandemic, its timetable has been moved up by four years to a target of 98 per cent of Canadians with high-speed internet access by 2026. With the faster pace, at least 90 per cent of us should be connected by the end of 2021.

The fund is focused on improvements in rural and remote communities across Canada to fix the disconnect between internet access for urban and rural households.  This means more remote work opportunities, better access to remote learning and safer access to healthcare, no matter where you live.

It’s not just for good connections at home, either. The improvements mean much better access to mobile networks on highways between remote communities. The result is better, safer navigation and access to emergency services for your family, even on the road in the middle of nowhere. Mobile projects will be focused on serving Indigenous communities and the roads leading to them.

The shape these improvements will take in your area will depend on where you live. Canada is huge, and its communities are hugely diverse, with diverse needs. Keep an eye out for local projects — they’re a small part of something much bigger.

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