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It’s Not Only The American Dream That’s Dead |
Here at The Juice, we are on top of two scary American stories. The cost of housing and increasing, potentially on the way to unsustainable consumer debt. However, we sometimes have to remind ourselves that these two things aren’t wholly American problems. Sean Hannity’s wildly entertaining interview with California Governor Gavin Newsom on Fox News reminded us of this. When Hannity pushed Newsom and blamed Joe Biden for inflation, Newsom reminded Hannity that inflation is a global problem. That’s an objective fact. He also implied that you can blame a strong economy (that benefits at least some people) for rising prices. Not quite as flat objective, however there is a case to be made that prices rise on consumer goods and housing as people continue to create demand and pay a premium for these things. Whether or not this rising tide at the top will lift all boats in the middle and lower rungs of the economy is debatable, but certainly, to some degree, within the world of possibility. Setting the rest of the world aside, this dynamic we summarized today and write about regularly exists in almost the exact same way in Canada as it does in the United States. Consider the following points:
Sounds familiar, eh? Then, there’s this:
The article goes on to notre that mortgage delinquencies remain at record lows in Canada… … thanks to the extraordinary steps lenders have taken to shield borrowers from the pain of higher rates, such as allowing homeowners to add unpaid interest to a loan’s principal or stop paying down the principal altogether. But both measures extend the amortization period of a mortgage, creating risks down the road. In other words, you can only put off financial strain and pain for so long before the bottom falls out. This also sounds familiar. Mortgage interest rates are on the rise in Canada as well. The increase the country experienced just the week before last means that new homeowners will pay a minimum of $11 more each month for every $100,000 financed. So, on that $861,000 property, we’re talking a monthly mortgage payment of around $100 more today than it was just a couple weeks ago. With the 30-year mortgage interest rate in the United State stubbornly hanging out around 7%, this also… sounds familiar. The Bottom Line: Misery loves company. And a global – or at least two-thirds’ worth of a continental – perspective. Things in Canada are just as bad (and some might say worse) on housing and debt than they are in the United States. If you’re interested in all things Canadian, subscribe to our sister newsletter, The Bacon. Three times a week we deliver a set of news and insights curated for Canadian investors culled from our more than 100 financial media partners. |
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