Economy
Recession Fears Loom, 51% of Canadians Would Miss Mortgage Payment Within Three Months
From RateFilter.ca
New data shows that Canadians are struggling with housing costs, with 62% spending more than the recommended 30% of pre-tax income on housing. Homeowners aren’t as financially secure as presumed, especially those holding mortgages. A concerning 51% of mortgage holders couldn’t survive more than three months without their primary income. This financial strain underscores the urgent need for both individuals and policymakers to address housing affordability.
Key Takeaways
- 51% of mortgage holders could not make it more than three months without their primary income without missing a payment; 16% couldn’t last even one month.
- 62% of Canadians exceed the CMHC’s recommended 30% limit on housing expenses, with the average household spending 37% of their pre-tax income on housing.
- Homeowners generally spend less on housing than renters (average of 34% vs. 43% of their pre-tax income). However, this is skewed by the 35% of homeowners who are mortgage-free. Mortgage holders spend an average of 41% of their income on housing.
The Hidden Struggles Behind the Housing Data
For many Canadians, the dream of homeownership is being challenged by a worrying financial reality. New data reveals a landscape where both homeowners and renters are grappling with costs that exceed the Canada Mortgage and Housing Corporation’s (CMHC) recommended limit of spending no more than 30% of pre-tax income on housing.
Homeowners Not as Secure as Assumed
Although homeowners have traditionally enjoyed a degree of financial security, the numbers tell a different story. Yes, 35% of homeowners are mortgage-free, which brings down the average housing expenditure for this group to 34% of pre-tax income. However, that percentage can give a misleading impression of overall financial well-being.
The Precarious Position of Mortgage Holders
When you focus on homeowners with mortgages, the picture becomes quite bleak. These individuals are devoting a whopping 41% of their pre-tax income to housing. Alarmingly, over half (51%) couldn’t manage more than three months without their main source of income; 16% would be in trouble within just a month.
Ongoing Financial Strain Amid Past Rate Increases
Over the past 18 months, we’ve seen a series of rate hikes from the Bank of Canada, which has contributed to an ongoing financial strain for many Canadians. These historical increases have only intensified concerns about housing affordability and financial stability, irrespective of what future rate changes may or may not occur. This backdrop of rising rates adds another dimension to the already challenging landscape of housing costs.
A Critical Time for Financial Health
“These statistics corroborate what we’ve been hearing anecdotally,” says Andy Hill, co-founder of ratefilter.ca. “Many Canadians feel like they’re at a breaking point due to higher interest rates. Even if the Bank of Canada pauses the rate hike, these borrowers will still be dealing with rates at a 20-year high.”
The Fragile Job Market
The data is even more unsettling when considering job security. Despite a low unemployment rate, 16% of mortgage holders could not withstand a month without income before falling behind on their mortgage payments.
Conclusion
These figures underscore the urgency for both policymakers and individuals to address the rising costs of housing in Canada. While the statistics offer a broad view, the individual stories highlight an unsettling financial instability lurking beneath the surface.
Proportion of Pre-Tax Income on Housing
R1. Please think about how much you spend on housing each month. This would include mortgage/ rent, property tax, strata fees, and utility costs such as electricity, heat, water, and other municipal services. Approximately what percentage of your pre-tax income do you spend on housing?
Methodology
- These results are based on an online survey of a representative sample of 1,548 adult Canadians (including 1,028 homeowners and 650 mortgage holders) surveyed using Leger’s panel, LEO, from October 13-16, 2023.
- As a non-random internet survey, a margin of error is not reported. For comparison, a probability sample of n=1,548 would have a margin of error of ±2.5 percentage points, 19 times out of 20.
- Any discrepancies between totals are due to rounding.
Economy
Not energy ‘transition’ but energy ‘addition’. Intermittent wind and sun requires backup power generation
From Resource Works
Until battery technology is an option, there is no real energy transition
Climate campaigners steadily push for clean, renewable energy sources to replace hydrocarbons. However, international consultants Wood Mackenzie view this push as overly simplistic, arguing it does not consider the complexities of energy supply and the uses of oil and gas that extend far beyond power generation.
“Perhaps most striking is the extraordinary contribution that oil and gas have made to energy supply and what a gargantuan task it will be to build a new low-carbon system in its place.”
The latest report from “WoodMac” lists several challenges for a future of low-carbon power.
For one, U.S. demand for electrical power is set to grow at least through the rest of this decade.
“What is exciting about this new growth is that it is a manifestation of the Fourth Industrial Revolution. Central to this is the explosive growth of data centres, the beating heart of the infrastructure supporting artificial intelligence (AI), cloud computing, digitalization, and big data. Second is a new wave of cleantech, including the manufacturing of semiconductors, batteries, and renewable energy equipment. Third is the increasing electrification of the economy.”
Offshore wind’s power output has an energy efficiency of 92% compared with oil and gas, which, in use, deliver only 25% of their original energy content. But “what may impress is how long it will take for the cumulative output of wind to exceed that of oil and gas, despite this disparity in energy efficiency.”
Closer to home, questions have been raised in Canada about climate campaigners’ arguments that the costs of solar and wind power operations have steadily decreased and are now comparatively affordable.
The small-c conservative Fraser Institute notes that the G7 countries (including Canada) have pledged to triple renewable energy sources to ensure an “affordable” energy future.
“But while direct costs for wind and solar are dropping, they remain expensive due in part to the backup energy sources required when renewables are not available.
“Wind and solar energy are intermittent, meaning they aren’t consistently available, so we need an alternative power source when there’s no sunlight or wind, given the current limited ability to store energy from solar and wind.
“So we must maintain enough energy capacity in a parallel system, typically powered by natural gas. Constructing and maintaining a secondary energy source results in higher overall energy costs because two energy systems cost more than one. Therefore, when evaluating the costs of renewables, we must consider the costs of backup energy.
“Often, when proponents claim that wind and solar sources are cheaper than fossil fuels, they ignore these costs.”
The TD Bank adds: “Despite the improvement in the cost-competitiveness of renewable and storage technologies, the growth of low-carbon electricity supply is likely to increase electricity costs.
“According to estimates by the Alberta Electric System Operator, the load-adjusted generation costs in 2035 could be 56–66% higher in net-zero-by-2035 scenarios compared to a technology trajectory based on current policies.
“For Ontario, we estimate that replacing expiring gas-generator contracts with a combination of solar, wind, storage, and small modular reactors could increase the average generation cost by around 20% in 2035 compared to what it would be if the gas contracts were renewed and the current procurement plan for new resources proceeds as planned.”
The Fraser Institute also cites a 2021 study by University of Chicago economists showing that between 1990 and 2015, U.S. states that mandated minimum renewable power sources experienced significant electricity price increases after accounting for backup infrastructure and other costs.
“Specifically, in those states, electricity prices increased by an average of 11 per cent, costing consumers an additional $30 billion annually. The study also found that electricity prices grew more expensive over time, and by the twelfth year, electricity prices were 17 per cent higher (on average).”
“Europe is another case in point. Between 2006 and 2019, solar and wind sources went from representing around 5 per cent of Germany’s electricity generation to almost 30 per cent in 2019. During that same period, German households experienced an increase in electricity prices from 19.46 cents to 30.46 cents per kilowatt hour — a rise of more than 56 per cent. This surge in prices occurred before the war in Ukraine, which led to an unprecedented price spike in 2022.”
Meanwhile, in the U.S., a study published in Energy, a peer-reviewed energy and engineering journal, found that — after accounting for backup, energy storage, and associated indirect costs — solar power costs skyrocket from US$36 per megawatt hour (MWh) to as high as US$1,548, and wind generation costs increase from US$40 to up to US$504 per MWh.
We’re firmly in favour of advancing renewable energy sources, and the sooner, the better. But the cost estimates need to be true
Business
Feds move target for net-zero grid back 15 years. Western provinces say it’s not of their business
From Resource Works
“These latest measures fail to recognize provinces have jurisdiction over the development and management of electricity. The federal regulations are duplicative, inefficient, and add to costs.”
The federal government has clarified its clean-energy goal for a net-zero power grid.
Its final Clean Electricity Regulations target a net-zero grid across the country by 2050. But didn’t Ottawa previously, in August 2023, set a goal of 2035?
Certainly, one leading environmental group declared: “The federal government has committed to achieving zero-emissions electricity by 2035.”
And a law firm that analyses energy matters told followers in August 2023: “Government of Canada releases draft Clean Electricity Regulations aimed at achieving net-zero emissions from Canada’s electricity grid by 2035.”
What Ottawa said in August 2023 was this: “The proposed regulations would set performance standards that would ensure that the sector achieves significant transformation by 2035, so that a robust foundation of clean electricity is available to power the electric technologies (e.g., electric transportation) needed to support Canada’s transition to a net-zero GHG emissions economy by 2050.”
Announcing that 2035 goal was a case of fuzzy wording, according to Energy Minister Jonathan Wilkinson. He said Ottawa could have been more precise in its language and context around what exactly the 2035 target referred to.
He now says: “2035 was really having a plan as to how you were going to reduce emissions to be able to get to a net-zero economy by 2050… Perhaps we were not as precise with our language as we should have been.”
Environment Minister Steven Guilbeault issued an update in February 2024: “All G7 countries, including Canada and the United States, have committed to transitioning to a net-zero electricity grid as a foundational measure to help achieve low-carbon economies by 2050.”
And he now says: “We knew from the get-go, from where we are to where we need to be, we couldn’t get there in 10 years… It was always our intention that we want to see things happening before 2035. But that we wouldn’t be able to get to a decarbonized grid before 2050.”
Whatever they said, meant, clarified, updated, and/or corrected, the new regulations face opposition and a court challenge from Alberta, for one.
Premier Danielle Smith criticized the latest regulations as unconstitutional, arguing they seek to regulate an area of provincial jurisdiction.
“After years of watching the federal government gaslight Canadians about the feasibility of achieving a net-zero power grid by 2030, we are gratified to see Ottawa finally admit that the Government of Alberta’s plan to achieve a carbon-neutral power grid by 2050 is a more responsible, affordable, and realistic target.
“That said, the federal government’s finalized electricity regulations remain entirely unconstitutional as they seek to regulate in an area of exclusive provincial jurisdiction. They also require generators to meet unreasonable and unattainable federally mandated interim targets beginning in 2035, which will still make electricity unaffordable for Canadian families.
“Alberta will therefore be preparing an immediate court challenge of these electricity regulations.”
Saskatchewan’s government said in a news release that it will simply not comply with the new regulations.
“Our government unequivocally rejects federal intrusion into our exclusive provincial jurisdiction over the electricity system.
“Saskatchewan will prioritize maintaining an affordable and reliable electricity grid to support our regional needs and growth. The federal Clean Electricity Regulations are unconstitutional, unaffordable, unachievable, and Saskatchewan cannot, and will not, comply with them.”
The Business Council of BC slammed the new federal regulations on multiple grounds: constitutionality, jeopardizing the reliability of electricity delivery, higher costs for businesses and households, limiting investment, regional inequities, technological limitations, and risks to greenhouse-gas management.
“These latest measures fail to recognize provinces have jurisdiction over the development and management of electricity. The federal regulations are duplicative, inefficient, and add to costs.”
And: “It is important to recognize that Canada’s combined electricity systems are already 84% non-emitting, and that electricity represents less than 10% of Canada’s total emissions. The sector has made more progress in reducing emissions than any other sector in the country over the past two decades.
“We urge the government to set aside these new regulations and work collaboratively with the electricity sector to develop a more balanced approach that respects provincial roles and will not risk undermining investment and driving up costs. The path to a cleaner energy system requires cooperation, not regulation.”
The latest announcement from Ottawa includes these statements:
- “Federal analyses find that the Regulations have no impact on electricity rates for the vast majority of Canadians, and in some cases, will even have a slightly positive impact on rates. Independent third-party expert modelling substantiates federal analysis that the Regulations are feasible.
- “To ensure rates are affordable for Canadian families over the coming decade, the federal government is investing $60 billion to support the electricity sector.
- “The adoption of efficient electric appliances, vehicles, and heat pumps presents an enormous opportunity for families to save money on their energy bills.
- “In the shift to clean electricity, 84% of households are expected to spend less on their monthly energy costs, when accounting for the over $60 billion in federal clean electricity incentives. This could lead to $15 billion in total energy-related savings for Canadians by 2035.”
All subject to clarification, updating, and/or correction—and Alberta’s promised court case.
-
International2 days ago
Poilievre rebukes Trump for suggesting Canada should become 51st US state
-
Daily Caller2 days ago
James Woods Smacks Down ‘Blithering Idiot’ Gavin Newsom For Dropping Ball On Forest Management
-
Daily Caller2 days ago
Victor Davis Hanson Condemns California’s DEI Hiring In Fire Departments, ‘Not Muscularity, Not Experience,’ Just DEI
-
International2 days ago
Three major wildfires rage in Southern California, killing two and destroying homes
-
Economy1 day ago
The European Union is shifting back towards fossil fuels
-
National1 day ago
Court challenge to Trudeau’s suspension of Parliament could result in early election
-
National1 day ago
Trudeau clinging like a ‘low-key autocrat’: Jeremy Nuttall
-
Alberta5 hours ago
Alberta Infrastructure reviews 2024 progress