Ok, as weather goes this year has been weird and I guess this week will be no different.
But meteorological weather is in no way reflecting the financial weather we are all facing.
The world's smartest (well one hopes) leaders try as they might cannot seem to wrangle 7 billion people to behave in a way that makes the economy do what they want. Strange how that happens. When I put it that way is it so surprising?
So what is new on the home front?
Well first off the 20 somethings of today are continuing the trend of earning less than the generation before, and the gap is widening. The worst part is that older workers doing the same job, even accounting for experience, are getting paid WAY more than the younger workers. The reason is simple it is corporations and governments gradually pushing down wage expectations so that when older workers, who knew a better life when workers were scarcer and they could make a living wage, will not kick up a fuss and rock the boat (they still have more democratic power), but the younger workers will not know any better and overall wage costs will decline increasing profitability. It is a good business strategy and quite long term thinking for a change, I am just not entirely sure what the final social ramifications will be, but I am sure it will not be good.
So, now younger workers cannot buy new homes, what will that do to prices over time? Older people may not get the money out of their homes that they had hoped, unless they sell to overseas parties hiding money in Canada, so maybe their retirement is not as easy. The other thing I think the western world is waiting for is to see what the generational shift in wealth will do to pull them out of the hole they are digging. I think that will depend on how selfless parents are in terms of spending their hard earned money vs. sacrificing again to leave something to their children, the "ME" generation giving up things...? Still a tough call.
So the government has tightened mortgage rules, debt with solid underpinnings (relatively) instead of credit cards etc. But OOPS we forget TD, and other banks now have all your assets underwriting any debts you have, (read your fine print) so if you get into trouble with an "unsecured" line of credit or credit card, they might dip into your savings accounts to clean up your mess, it might not have been your plan, but it is theirs. I generally suggest keeping debt at one financial institution and assets at another to keep those two worlds from colliding, and maybe undermining your self management. Your call though. I keep reminding people banks are only your friends when they can make money from you, so be careful how you handle that relationship. There is a reason they give you a better rate when you give them more business. FINE PRINT.
The Bank of Canada held its overnight rate for a long time now, with no signs of change for some time. This is great news for variable rate holders. They are predicting rate increases, but no timelines yet. But the increases they are anticipating are not earth shattering, though it may shock young people who have only been borrowing since 2008.
Bond rates are going up so lenders are on the cusp of raising rates again. Not much, and they may come down again, but generally there are optimistic noises coming form economists which is not good news for borrowing rates.
The deals I post today may not hold tomorrow but more often than not I can get you something better than most people can find on their own.
All the best.
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