The Rise of Longer Mortgages: A 47-Year Mortgage and Beyond

Are you missing something this week? No panic. CBC’s Marketplace summarizes the consumer and health news you need.

Want this in your inbox? Get this Marketplace Newsletter every Friday.

A 47 year mortgage? They’re out there – and there could be longer ones to come

When Michael Girard-Courty bought his duplex in Quebec last year, the $1,156 monthly mortgage payment was well within his budget. But since he signed on the dotted line, the Bank of Canada has raised interest rates several times, meaning more of his payment is going toward interest — and not paying off the loan at the pace he planned.

As things stand, “only $23 goes toward paying off the principal on my mortgage and the rest goes toward interest,” he told CBC News. “And my mortgage went from 25 years to 47 years.”

He is not alone.

Negative amortization occurs when the monthly loan payments are no longer sufficient to pay off anything other than interest, i.e. the balance grows. This can result in payment terms being extended for years or even decades to compensate.

Under normal circumstances, on a standard 25-year mortgage, a certain percentage of the payment goes to the bank in the form of interest, while another part is used to pay off the principal. As the borrower makes their payments, they owe less and less money over time.

But due to the sharp and rapid rise in interest rates over the last year and a half, this repayment balance has become out of balance.

Exact numbers are difficult to determine, but regulatory filings from Canada’s largest banks show that about a fifth of the mortgages on the books of Bank of Montreal, TD and CIBC negatively amortized last quarter.

That’s around $130 billion in real estate debt, the mortgage of which extends to 35, 40 or even more years instead of the usual 25 years. And with about 100,000 mortgages coming up for renewal each month in Canada, more are likely to come.

This month, the Office of the Superintendent of Financial Institutions will unveil new capital adequacy guidelines for banks and mortgage insurers. Expected changes include some aimed at curbing the rise of negatively amortizing loans. Read more

Grocery chains promise more discounts and price freezes, Ottawa says

Canada’s five largest grocery chains have submitted plans to the federal government to stabilize food prices, Industry Minister François-Philippe Champagne said Thursday.

Champagne met in Ottawa last month with the heads of Loblaws, Sobeys, Metro, Costco and Walmart and told them that Ottawa would like to see their plans to stabilize prices by Thanksgiving.

The chains are promising further discounts, price freezes and price matching promotions, Champagne said Thursday.

“These measures will result in a much-needed (and) more competitive market, and the winners from this are obviously Canadians,” he said, adding that Canadians should expect grocers to implement these plans “within days.” would begin.

In August, prices for food purchased in stores rose 6.9 percent year-on-year. That’s still almost double the overall inflation rate of four percent, but is below the recent high of more than 11 percent. Read more

There is an extensive lawsuit against Amazon in the USA for allegedly unfair practices

The US Federal Trade Commission (FTC) filed a long-awaited antitrust lawsuit against Amazon on Tuesday, accusing the online retailer of harming consumers through higher prices.

It is the latest legal move by US authorities aimed at breaking Big Tech’s dominance of the internet.

“The FTC and its government partners say Amazon’s actions allow it to deter competitors and sellers from lowering prices, degrading quality for buyers, overcharging sellers, stifling innovation and preventing competitors from to compete fairly with Amazon,” the agency said in a statement.

The FTC is asking the court to issue a permanent injunction ordering Amazon to stop trading.

Amazon says the FTC lawsuit is false and would harm consumers by leading to higher prices and slower deliveries.

“The practices challenged by the FTC have helped spur competition and innovation across the retail industry, resulting in greater selection, lower prices, and faster delivery speeds for Amazon customers, as well as greater opportunities for the many companies that sell in the Amazon store “sell,” he said David Zapolsky, Amazon’s general counsel.

The FTC said Amazon — which was founded in 1994 by Jeff Bezos and is worth more than $1 trillion — penalized sellers who wanted to offer lower prices than Amazon by making it harder for consumers to find the seller on Amazon’s platform to find.

Other allegations against Amazon include:

• Give your own products preference over the competition in the search results.
• The FTC charges sellers costly monthly and advertising fees and says they have no choice but to rely on Amazon.
• Using “unlawful coercion” to pressure sellers to join Amazon’s Prime shipping service.

FTC Chairwoman Lina Khan also said Amazon used illegal tactics to fend off companies that challenged its monopoly. Read more

What else is going on?

WestJet is suspending flights between Toronto and Montreal until next April
The move follows the company’s acquisition of Sunwing and the closure of Swoop.

Toronto’s pressured rental market is negatively impacting people’s mental health
We have summarized your stories and give you tips on how to deal with them.

Marketplace needs your help!

Marketplace would like to hear more about your experience with your electric car – from buying it to driving it, charging it to repairing it. Write to us: [email protected]

Start the countdown! Season 51 of Marketplace Starts October 13th at 8:00 p.m. (8:30 p.m. in NL). You can also watch new episodes weekly on CBC Gem.

Are you looking for the latest business news? You would also like to subscribe to this newsletter.

Mind your business is your weekly look at what’s happening in the world of business, business and finance. Subscribe now.

Catch up on past episodes of Marketplace on CBC Gem.