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Qureshi is among the younger Canadians who, lured by record-low borrowing costs, are fuelling a surge in Toronto condo sales. As the nation’s household debt nears an all-time high, these buyers may face a spike in mortgage payments and the possibility of default once rates begin to climb.

“The younger millennials don’t have any recollection of any interest rate rise or shock and what impact that would have on their day-to-day finances,” said Jason Daly, vice president of product and marketing at Waterloo, Ontario-based Manulife Bank, where residential mortgage loans make up about 80% of its $23 billion in assets. Many millennials, born from 1980 to 2000, don’t realize that when rates jump their debt servicing costs will go up significantly, he said.

Condo Sales

Condo sales in Toronto, Canada’s largest city, jumped 20% to about 2,000 transactions in September from the year- earlier period. That compares with 6.5% the month before and 14% in July.

Developers, whose cranes crowd the Toronto skyline, have about 130 condo towers under construction. That’s the most in any North American city, according to industry researcher Emporis GmbH.

First-time homebuyers are the most active purchasers of condos, according to Benjamin Tal, deputy chief economist at Canadian Imperial Bank of Commerce in Toronto. They have been lured to the towers after mortgage restrictions in the last five years priced many first-time buyers out of the low-rise market. Today, half of those in Canada aged 25 to 35 are homeowners, according to data compiled by CIBC.