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Toronto households have to save for 102 months to afford a downpayment on a home

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Photo: Dafne Cholet/Flickr

On the shoulders of higher interest rates, Canadian housing affordability continued to worsen in the closing quarter of 2018, according to National Bank’s Housing Affordability Monitor.

To measure housing affordability each quarter in 10 major markets, National Bank looks at how long it would take a typical household to save for a downpayment on median-priced home as well as what share of income monthly mortgage payments would eat up.

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For downpayment savings, National Bank economists assume a household saves 10 percent of its pre-tax income. Mortgage payment calculations are based on a 25-year amortization period and a five-year term.

The results from these and other National Bank number-crunching exercises found within the report may surprise readers — even though this marks the 14th straight quarter that affordability has eroded in Canada. Here are 10 of the bank’s findings.

1. Renting a condo will now cost you less than buying one.

National Bank compares what someone would spend on monthly mortgage payments versus the average rent. Since 2011, buying a two-bedroom condo in Canada was, on average, cheaper than renting a similar unit. That changed at the start of 2018, and remained the case by the end of that calendar year.

2. It would take more than 28 years for a typical Vancouver household to save for a downpayment on a home.

A median-earning household in Vancouver would need 340 months to put away enough for a downpayment on a home, including all popular housing types. Some consolation for would-be buyers: when looking exclusively at condos, that timeline drops to 61 months.

3. In Toronto, households have to save for 102 months to afford a downpayment.

The average dating back to 2000 is 45 months, highlighting how Toronto’s ownership-housing costs have skyrocketed in recent years. The number is also well above the national average of 58 months.

4. Households in Canada need to spend half their incomes to cover mortgage payments.

The share of the median Canadian income required to afford monthly mortgage payments continues to rise. At 50.5 percent, the current share is up 3.1 percentage points from a year ago.

5. Despite affordability challenges, downtown condo prices in big Canadian cities are far cheaper than in other global urban centres.

On a price per square foot basis (in US funds), even Canada’s priciest cities compare favourably with other international destinations for downtown living. For 650-square-foot downtown Vancouver apartment, buyers need to shell out $770 per square foot. That may seem hefty, but in Hong Kong, the priciest market National Bank examined, the cost is $2,858 per square foot, and eight other markets crossed the $1,000-per-square-foot threshold.

6. Two Canadian cities saw affordability improve — but only marginally.

Calgary and Edmonton both saw affordability improve slightly on a quarter-over-quarter basis. In Calgary, mortgage payments would require about a third of a household’s mediancome, down just 0.3 percentage points from the third quarter. Meantime, an average household in Edmonton would need to dedicate 22.7 percent of their income to mortgage-related costs, down 0.1 percentage points.

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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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