Canadians don’t consider home loans to be ‘debt’, especially the younger generation… Winnipeg councillors see audit on real estate deals… A bit of Canada up for sale in Miami... And, coping with the bubble, how the UK’s struggling with conditions similar to ours…
That’s not debt – it’s just my mortgage
Almost half of Canadians believe that they are ‘debt free’ even when they still have a mortgage. A survey by Manulife found that the younger generation in particular, do not consider a mortgage to be a burden in the same way as credit card debt. While 29 per cent of those over 50 don’t see mortgages as debt, the figure rises to 68 per cent among those in their 20s. This view of debt may be due in part to the vast differences in interest rates; despite it being a higher level of debt, a home loan at 2.9 per cent is less daunting than a credit card with interest rates in double figures. The different views by generation are likely to be down to experience. For those in their twenties, a loan secured on an asset which is (generally) increasing in value makes mortgages seem low risk. For the older generation, they are only too aware that interest rate hikes, price crashes, unemployment or illness are all factors that can quickly make mortgages seem very much like debt. Read the full story.
Winnipeg city council sees audit
It’s been a long time coming but councillors in Winnipeg have finally got to see an audit on the city’s real estate deals. The audit looks into a number of high-profile purchases by the city and consulting firm EY have found a number of concerns. Among the deals highlighted was the purchase of a former Canada Post building which was to become a new police HQ. The audit found that there was no independent appraisal of the property and no other sites for the HQ seem to have been considered. For that reason EY say it is not possible to assess whether the city got value for money on the deal. Read the full story.
You could own a little bit of Canada…. In Miami
The Canadian government is selling off a prime piece of real estate; the official residence of Canada’s consulate in Miami. The multimillion-dollar Spanish-styles mansion boasts six bedrooms, six bathrooms, ‘lush landscaping’ and a saltwater swimming pool; and a $5.5 million price tag. The sale by the Department of Foreign Affairs is part of a drive to downgrade federal property around the world, a move that critics say send the wrong message. The government bought the Miami residence in 2009 for $1.9 million so it would seem to be a good return on their investment, depending of course on how much has been spent on it since, and assuming they get their listing price. Read the full story.
Watching the UK’s bubble
Canada is not alone in being at risk of a housing bubble. The high prices, low interest rates conditions we have are replicated in many countries, most vividly in the UK. Today, the deputy governor of the Bank of England has warned that the housing market is the ‘biggest risk’ to the UK economy. With London in particular seeing huge price rises, the fastest rises since 1987, and with young singletons being unable to afford to buy in the city, the central bank has been trying to cool the market, but so far measures haven’t seen an impact. Many Canadians will be keen to see what former Bank of Canada governor Mark Carney can do overseas, in case we need to take similar action here in the coming months. Read the full story.