I have been reading about Non-Resident Speculation Tax (NRST) in Ontario, and clearly I have a few things more to figure out. First off, it seems to be in effect now, so it is worth following up on. I will put the link to the bulletin below in case you want to read through the plan. It seems that they have covered off making a partnership with a Canadian as a way to avoid the tax. Even with a 50/50 deal the whole purchase price is taxed if one of the partners is a non-resident.
There does seem to be an exception for couples, married or cohabiting, with or without kids. There are also rules to help people aiming to become permanent residents or protected persons (as defined by the Immigration and Refugee Protection Act.)
There are also rebates if someone becomes a permanent resident of Canada sometime after the purchase, or is an international student enrolled full-time for a continuous period of at least twp years, and for foreign nationals working in Ontario.
They are putting systems in place to prevent tax avoidance, by saying all land transfers are subject to audit and they have penalties that can include fines and/or imprisonment.
All-in-all, if you support the tax they seem to have covered the bases so that Canadians cannot get paid to be on title to help the foreign buyer avoid the tax. They even seem to be making it so that even if a Canadian and a foreign national have a baby together, making it a fairly serious relationship (married or unmarried), the foreign national must certify "they will occupy the property as their principal residence." This sort of ties people to living here, which is really the point of a "non-resident" tax I suppose. It is interesting, because while they can say they plan to live here, what if they do not? How will this be audited? How will the tax be retroactively enforced? What if they meant it when they said they would stay, but life changes?
I still have more questions I need to find answers for, but in the meantime non-residents should start by reading the online information, then contact the Ministry of Finance, or if you have a good lawyer, and can pay the bill, give the lawyer a call, this is all pretty new, so give yourself time to understand the rules, exemptions etc. make sure you know what you can afford, with or without the tax, before you buy.
Link to Basic information and some FAQs on the Ontario government site
Friday, June 9, 2017
Tuesday, April 25, 2017
New Classifications for Mortgages & who gets the best rates
Some thoughts on the new rules and things to know.
The terms now are insured, insurable and uninsurable.
THEN
A High Ratio mortgage is the same as it has been for a long time, a down payment of less than 20%. The borrower still has to pay the extra insurance costs, and the rates went up recently so it is a bit more than before.
Conventional Mortgage is still a mortgage where you put down 20% or more of the purchase price or renew at less than 80% of the value. All refinancing at the best rates must be conventional.
Here is where the new terms come to play.
NOW
Insured - This is like the old high ratio. Client is paying the mortgage insurance equity in the home is 19.99% or less.
Insurable - This is a new term lenders use to define a mortgage that is in their portfolio and can be insured at the lender's expense for a property valued at less than $1 million. It also has to fit the insurers rules where it qualifies at the Bank of Canada benchmark rate (a higher rate to make it far more conservative and thus lowering what some people can borrow) with a 25 year maximum amortization (some other loans can go to 30 years), and with a down payment of at least 20%.
Uninsurable - This is the "new category," it is a mortgage that is not eligible for mortgage insurance. Examples include, refinancing, single unit rentals (rentals of between 2 - 4 units are insurable), properties greater than $1 million.
The BEST interest rates are for the insured category, the other 2 can pay between 0.20% and 0.40% more. The new government rules at the end of last year, meant increased costs to lenders are being passed on to the borrower.
Why have the insurance? Lenders like it because it helps protect them against foreclosure, fraud, and possible loss of value on the property (which may seem hard to believe today, but thinking long term, it is possible.
The higher rate then is effectively a form of self-funded insurance since they cannot get it from CHMC or Genworth etc.
Consider then the costs of the higher interest rates vs. putting less than 20% down on some lower costs homes. You should also factor in how fast the property prices are increasing, if they are, and whether you can save fast enough, and/or your incomes are increasing enough to buy that same place when you have more money. It is a tricky balance, and each regional market may have a different answer, so call Andrea if you have any questions about what is right for you.
Rules in 2017 that change mortgage rates & deals
While the rule still holds that if you put less than 20% down you do not need mortgage insurance (e.g. CMHC or Genworth etc. - though life and disability should be seriously considered) it does mean your mortgage will be at a higher rate than those paying the insurance.The terms now are insured, insurable and uninsurable.
THEN
A High Ratio mortgage is the same as it has been for a long time, a down payment of less than 20%. The borrower still has to pay the extra insurance costs, and the rates went up recently so it is a bit more than before.
Conventional Mortgage is still a mortgage where you put down 20% or more of the purchase price or renew at less than 80% of the value. All refinancing at the best rates must be conventional.
Here is where the new terms come to play.
NOW
Insured - This is like the old high ratio. Client is paying the mortgage insurance equity in the home is 19.99% or less.
Insurable - This is a new term lenders use to define a mortgage that is in their portfolio and can be insured at the lender's expense for a property valued at less than $1 million. It also has to fit the insurers rules where it qualifies at the Bank of Canada benchmark rate (a higher rate to make it far more conservative and thus lowering what some people can borrow) with a 25 year maximum amortization (some other loans can go to 30 years), and with a down payment of at least 20%.
Uninsurable - This is the "new category," it is a mortgage that is not eligible for mortgage insurance. Examples include, refinancing, single unit rentals (rentals of between 2 - 4 units are insurable), properties greater than $1 million.
The BEST interest rates are for the insured category, the other 2 can pay between 0.20% and 0.40% more. The new government rules at the end of last year, meant increased costs to lenders are being passed on to the borrower.
Why have the insurance? Lenders like it because it helps protect them against foreclosure, fraud, and possible loss of value on the property (which may seem hard to believe today, but thinking long term, it is possible.
The higher rate then is effectively a form of self-funded insurance since they cannot get it from CHMC or Genworth etc.
Consider then the costs of the higher interest rates vs. putting less than 20% down on some lower costs homes. You should also factor in how fast the property prices are increasing, if they are, and whether you can save fast enough, and/or your incomes are increasing enough to buy that same place when you have more money. It is a tricky balance, and each regional market may have a different answer, so call Andrea if you have any questions about what is right for you.
Thursday, April 20, 2017
A nice idea - Thanks Dominion Lending - Clearly the mortgage agent you should call in this case is Andrea Meynell - :)
While
many people will speak to a mortgage broker before buying a home, few
people call a mortgage broker before selling a home. Calling could save
you thousands of dollars and many sleepless nights.
Why? Brokers understand mortgages and ask the right questions. How long do you have remaining in your present mortgage? Do you know if it’s portable to a new property? Have you heard of increase and blend? A mortgage broker can help you to anticipate a penalty to break your present mortgage and see if porting or taking your mortgage to your new property is a good idea. Need more money? Blend and Increase will allow you to increase your mortgage amount and blend the old rate with the present day rate and save you thousands in penalties.
If you are at the stage in life where you have children leaving for university and you are down-sizing, perhaps a line of credit might be useful for helping to pay tuition and dorm fees.
While you may like your home it may need a new roof. Most home buyers do not want a fixer-upper and will discount your selling price to account for this. It may be easier to get the price you want and sell faster if you replace the roof, furnace or whatever is old yourself. The problem is that you are saving money for a down payment. Your mortgage broker can come to the rescue with a line of credit, either secured or unsecured which can be paid out with the home sale. In short, “we’ve got a mortgage for that!”.
Remember, calling your Dominion Lending Centres mortgage broker before buying is a no-brainer but why not call them before you sell.
Why You Should Speak To Your Mortgage Broker Before You Sell Your Home
While
many people will speak to a mortgage broker before buying a home, few
people call a mortgage broker before selling a home. Calling could save
you thousands of dollars and many sleepless nights.Why? Brokers understand mortgages and ask the right questions. How long do you have remaining in your present mortgage? Do you know if it’s portable to a new property? Have you heard of increase and blend? A mortgage broker can help you to anticipate a penalty to break your present mortgage and see if porting or taking your mortgage to your new property is a good idea. Need more money? Blend and Increase will allow you to increase your mortgage amount and blend the old rate with the present day rate and save you thousands in penalties.
If you are at the stage in life where you have children leaving for university and you are down-sizing, perhaps a line of credit might be useful for helping to pay tuition and dorm fees.
While you may like your home it may need a new roof. Most home buyers do not want a fixer-upper and will discount your selling price to account for this. It may be easier to get the price you want and sell faster if you replace the roof, furnace or whatever is old yourself. The problem is that you are saving money for a down payment. Your mortgage broker can come to the rescue with a line of credit, either secured or unsecured which can be paid out with the home sale. In short, “we’ve got a mortgage for that!”.
Remember, calling your Dominion Lending Centres mortgage broker before buying is a no-brainer but why not call them before you sell.
Monday, April 17, 2017
12 Apr 2017. - From Dominion Lending - My new Brokerage - I like the summary so thought I would share.
Bank of Canada Upgrades Forecast, But Keeps Rates Unchanged
For years now, the Governor Stephen Poloz and his Bank of Canada colleagues have held the key overnight rate unchanged at 1/2 percent,
while at the Federal Reserve has hiked rates several times with more to
come. The jobless rate is at a mere 4.5 percent in the US, clearly at
or near full employment and the Fed policy makers have suggested they
will reduce liquidity further this year and next. Once again today, the
Bank of Canada has held the key overnight rate steady while upgrading
their outlook for the economy.Economists now expect the Canadian economy to grow at a rate of roughly 2.5 percent, compared to 1.4 percent last year and a mere 0.9 percent the year before. Indeed, economic activity has accelerated sharply since the middle of last year–up at a 4.3 percent annual pace over that seven-month period. Job creation has been strong since the summer. The Business Outlook Survey suggests that business investment–a disappointing underperformer–is poised to rise as the oil sector digs itself out of the rut caused by the collapse in oil prices in mid-2014. Export growth accelerated sharply until February, which hopefully is a one-month aberration and housing activity certainly remains strong–too strong in the Greater Toronto Area and its environs, as well as in parts of British Columbia.
No one expects the Bank of Canada to raise rates simply because of the housing market, as housing markets are not overheated in much of the rest of the country.
In today’s Monetary Policy Report (MPR), the Bank boosted their
forecast of Canada’s economy this year to 2.6 percent from 2.1 percent
in the January MPR. For 2018, growth is now projected to be 1.9 percent
(slightly below the January forecast). However, the Bank suggested that
the “composition of aggregate demand is uneven.” According to today’s
MPR, “In the oil and gas sector, a resumption of growth in investment
spending is under way in the wake of significant adjustments to past
declines in commodity prices. This contributed, together with very
strong consumption and residential investment, to a temporary surge in
growth in the first quarter. In contrast, non-commodity business
investment and exports remain weak, raising questions about the
medium-term sustainability of the upturn”.“Economic activity will be supported by rising foreign demand, federal fiscal stimulus and accommodative monetary and financial conditions. In addition, the composition of demand growth is expected to broaden: the pace of household expenditures, especially residential investment, moderates as the contributions from exports and business investment increase, albeit at a much slower pace than would normally be expected at this stage of the cycle. Ongoing competitiveness challenges and uncertainty surrounding the prospects for global trade are expected to limit this broadening of growth. A notable increase in global protectionism remains the most important source of uncertainty facing the Canadian economy”.
The Bank’s forecast remains a bit below the consensus view of Bay Street economists. The Bank has underestimated growth for many quarters. The MPR suggests that “while the degree of excess capacity has declined since the January Report, the Bank judges that in the first quarter of 2017 it remains material, between 1 1/4 and 1/4 per cent”. The output gap is now projected to close in the first half of 2018, a bit sooner than the Bank anticipated in January.
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Dr. Sherry Cooper
Chief Economist, Dominion Lending CentresSherry is an award-winning authority on finance and economics with over 30 years of bringing economic insights and clarity to Canadians.
More Posts - Website
Monday, January 9, 2017
Happy New Year - Economic Outlook
I want to start off by letting you know I am very
excited about changing to Dominion Lending Centres Expert Financial
brokerage. I was getting very frustrated with Northwood and the support
was just not there. In the few days since I have switched over I already
have access to more tools and better information than ever before. I can
also offer some great new products, but more on that later.
On the economic and regulatory front... Well what can I say it has been a crazy few months. The new rules are kicking in for mortgages making it harder to qualify for the larger amounts of old. The government's stated goal is to keep us from burying ourselves in debt paying for the houses, and by implication freeing up money for us to spend on other stuff so we can keep the economy going. If we have big mortgages and no spare money there is not much left for toys, extras, renovations and nights out. There is a plan, it just may not have been yours.
The flip side of this is that Canada is now on the radar and housing prices are cheap by "world class" city standards. Sometimes we have to be careful what we wish for. So now foreign buyers are part of the game and when the dollar weakens they have more available cash to buy properties because many hold USD.
I will write more about the new rules in the next issue, in the meantime here is a link it an article. CBC Business
What we know may affect 2017 from 2016 - Brexit, the refugee crisis in Europe, Trump, and oil prices, among others.
Where we are now.
Job number for December look great, this means more people working in full-time jobs and as "the slack" is absorbed there will be less pressure to keep rates low. Also, November saw a trade surplus for Canada, this is good because it means more money in than out, suggesting a strengthening across many industries.
The US the economy is still stronger than here, and the Fed may keep raising rates, if we do not raise rates, or things do not get stronger it may lead to a drop in the Canadian dollar. If Trump does what he says he will, then there will be a whole lot of stimulus in the US, this is why the bond markets have started to push mortgage rates higher, as people sell off the bonds in anticipation of the higher US deficits.
We can expect to keep seeing higher mortgage rates, and while these rates are still historically extremely low the 20 somethings have been used to something even better, in fact we have all developed a fondness for these low rates, but some remember the 16%+ days and some just the 6% days, so rates below 3% is still a pretty good deal. I just though a little perspective was in order when I talk about rate increase, instead of 2.39% we are going to 2.69 - 2.89%.
Job number for December look great, this means more people working in full-time jobs and as "the slack" is absorbed there will be less pressure to keep rates low. Also, November saw a trade surplus for Canada, this is good because it means more money in than out, suggesting a strengthening across many industries.
The US the economy is still stronger than here, and the Fed may keep raising rates, if we do not raise rates, or things do not get stronger it may lead to a drop in the Canadian dollar. If Trump does what he says he will, then there will be a whole lot of stimulus in the US, this is why the bond markets have started to push mortgage rates higher, as people sell off the bonds in anticipation of the higher US deficits.
We can expect to keep seeing higher mortgage rates, and while these rates are still historically extremely low the 20 somethings have been used to something even better, in fact we have all developed a fondness for these low rates, but some remember the 16%+ days and some just the 6% days, so rates below 3% is still a pretty good deal. I just though a little perspective was in order when I talk about rate increase, instead of 2.39% we are going to 2.69 - 2.89%.
I look forward to seeing what happens with NAFTA and
the world in general, I am both amused and concerned at the puppet strings
being pulled by Putin in the US, and seeing the vaunted US democratic ideals
being played like a concert piano by a Cold War KGB veteran, and the allies
Trump (whether he realizes it, or not) is putting in place to destabilize the
global dynamic and not just the national one. How that will play out on
global trade and economics will be a brand new area of study with very little
precedent. In the meantime, I am hoping only normal events and
trade matters affect what lies ahead.
Friday, September 9, 2016
Economic News & Possible Rate Changes - Next Year
In my last post I wrote about Brexit, and over the summer I went to the UK. On my trip I met and spoke with a range of people, some horrified by the outcome and hoping the government will come back to voters with the results of what Brexit negotiations really will mean for the UK and seek another vote, others who made gobs of money after the results, and still others firmly happy with the results and looking forward to independence. I hear some farmers though are a little uncertain the UK government will keep up the same subsidies they have been enjoying under the EU. Nothing is negotiated yet, and the rest of Europe is fuming, quietly at this stage; I suspect they are still hoping for a new vote.
I also heard some speculation that one of the reasons the pro-Brexit leaders dropped off the radar so quickly after the vote was because they were, in part, funded by Russia as part of Putin's effort to weaken Europe. Whether true, or not, it certainly will help Russia if the UK does fully withdraw in a few years time, as would a Trump win in November. Like China, Russia is playing a long game.
I think the end result is that economies in many countries will be slow in general with bursts of up, flat periods, and maybe a little down, for some years to come, but I do not foresee sustained upside for some time.
The recent Bank of Canada announcement held rates steady at 0.5%, and I am sure I heard a news report that they are not expecting rate increases until well into next year. While the 20-40 year old age group is having to deal with ever increasing housing prices in major markets, they will certainly have enjoyed almost a decade of historically low borrowing costs, never knowing the 10.02 - 19.41% average mortgage rates of the period between 1973 - 1992. Yes, I did say 19.41%, it was the average 5 year fixed rate in March 1982 according the the Bank of Canada. So each generation has had its challenges.
So, while the rates on offer to consumers may go up and down a bit as lenders compete for business, and balance that against boosting profits, people can still expect to get cheap money for the foreseeable future. Enjoy, and unless you are making big bets and investing in something you feel good about, take this time to pay off debts as soon as you can, it will make your future more relaxed, and if rates do go up it will not hurt as much.
I also heard some speculation that one of the reasons the pro-Brexit leaders dropped off the radar so quickly after the vote was because they were, in part, funded by Russia as part of Putin's effort to weaken Europe. Whether true, or not, it certainly will help Russia if the UK does fully withdraw in a few years time, as would a Trump win in November. Like China, Russia is playing a long game.
I think the end result is that economies in many countries will be slow in general with bursts of up, flat periods, and maybe a little down, for some years to come, but I do not foresee sustained upside for some time.
The recent Bank of Canada announcement held rates steady at 0.5%, and I am sure I heard a news report that they are not expecting rate increases until well into next year. While the 20-40 year old age group is having to deal with ever increasing housing prices in major markets, they will certainly have enjoyed almost a decade of historically low borrowing costs, never knowing the 10.02 - 19.41% average mortgage rates of the period between 1973 - 1992. Yes, I did say 19.41%, it was the average 5 year fixed rate in March 1982 according the the Bank of Canada. So each generation has had its challenges.
So, while the rates on offer to consumers may go up and down a bit as lenders compete for business, and balance that against boosting profits, people can still expect to get cheap money for the foreseeable future. Enjoy, and unless you are making big bets and investing in something you feel good about, take this time to pay off debts as soon as you can, it will make your future more relaxed, and if rates do go up it will not hurt as much.
Tuesday, June 28, 2016
BREXIT - Now the wheels are in motion - What might it mean for mortgage rates?
The news before Brexit had been that rates were expected to rise, but as I, and many others have said, that always assumes nothing new happens to change the plan. Brexit changes the plan. Not only has the UK currency dropped off a cliff, global markets went on a crazy downward spiral, but what does it mean for mortgage rates?
If they were going to raise rates the economies of the world and particularly North America would have to be steady, solid and are on an upswing, and while Europe is not Canada's largest trading partner you cannot slam that many "rich" countries and not have some kind of global falling of the dominoes. As angry as the Europeans are at Britain, and as shocked as Cameron might be that his silly gamble to resolve internal party disagreements has now led to a global crisis, the world needs and wants some stability, so "the powers that be" will work at making the ride as smooth as they can while still slapping Britain on the wrist. The odds are also strong that Scotland will now separate from England and Northern Ireland may join the south, ending many, many years of another type of disagreement. (It helps that the rule of the RC church is also losing some grip on the laws of the Republic of Ireland making it easier for the Protestants to consider joining.)
So economic turmoil tends not to lead to stronger economic growth, which in turn lowers the pressure of the bond markets, and the Bank of Canada to raise rates.
The bottom line is that anything that is bad for the global economy is going to keep rates low, which is great for borrowers, but tough for the unemployed and also making it tough for governments to raise revenue without increasing tax rates to meet much needed infrastructure and other spending needs.
On the housing side the government therefore will be turning to other tools to tackle the insanity of the Toronto and Vancouver housing markets, so I will be keeping an eye out for more changes to the mortgage rules in coming months.
If they were going to raise rates the economies of the world and particularly North America would have to be steady, solid and are on an upswing, and while Europe is not Canada's largest trading partner you cannot slam that many "rich" countries and not have some kind of global falling of the dominoes. As angry as the Europeans are at Britain, and as shocked as Cameron might be that his silly gamble to resolve internal party disagreements has now led to a global crisis, the world needs and wants some stability, so "the powers that be" will work at making the ride as smooth as they can while still slapping Britain on the wrist. The odds are also strong that Scotland will now separate from England and Northern Ireland may join the south, ending many, many years of another type of disagreement. (It helps that the rule of the RC church is also losing some grip on the laws of the Republic of Ireland making it easier for the Protestants to consider joining.)
So economic turmoil tends not to lead to stronger economic growth, which in turn lowers the pressure of the bond markets, and the Bank of Canada to raise rates.
The bottom line is that anything that is bad for the global economy is going to keep rates low, which is great for borrowers, but tough for the unemployed and also making it tough for governments to raise revenue without increasing tax rates to meet much needed infrastructure and other spending needs.
On the housing side the government therefore will be turning to other tools to tackle the insanity of the Toronto and Vancouver housing markets, so I will be keeping an eye out for more changes to the mortgage rules in coming months.
Friday, January 8, 2016
Know the Key Factors to getting a Mortgage for a Cottage
Owning a cottage can be a wonderful thing if you enjoy leaving the
concrete jungle that is city life and embracing the green oasis that is
country life.
When the warm weather arrives, nothing beats loading up the family car with loved ones, luggage, and other goods, and making the trek to the family cottage. Unless you were gifted one or had a sizable enough cash pile to buy one outright, you will need to obtain a mortgage to make your dreams of owning a cottage come true.
Here are some key factors to getting a mortgage for a cottage. What you’ll find is that lenders will consider certain criteria before deciding whether or not to approve your cottage mortgage request.
Location, Location, Location
Lenders will want to assess the cottage you want to buy to determine, first, if they should lend you the money you need and to determine how much they are open to lending if your request gets the go-ahead. In addition to location, lenders will look at specific things such as the following:
You will need to get mortgage default insurance if you can’t come up with a down payment of 20% or more of the cost of the cottage. Since second-home mortgages are no longer insurable by the Canada Mortgage and Housing Corporation, you will have to find a private mortgage insurance firm in the event that you require mortgage default insurance.
How Much Can You Afford?
Lenders will, of course, want to be reasonably certain that you have the financial wherewithal to repay the loan. That means you need to have the sort of income that shows that you are capable of repaying however much you want to borrow.
Options
In the event that you can’t get the full loan amount you require, you will have other options on the table. For instance, you could potentially refinance your house or tap a line of credit to supplement what the lender is willing to lend you.
Words to The Wise
Getting the cottage of your dreams will take planning if you can’t pay it off in one shot, but obtaining a mortgage is possible. When you know the key factors to getting a mortgage for a cottage, you’ll be that much closer to enjoying your new cottage.
For help and more information Contact Andrea Meynell
(Northwood Mortgage lic 10349)
When the warm weather arrives, nothing beats loading up the family car with loved ones, luggage, and other goods, and making the trek to the family cottage. Unless you were gifted one or had a sizable enough cash pile to buy one outright, you will need to obtain a mortgage to make your dreams of owning a cottage come true.
Here are some key factors to getting a mortgage for a cottage. What you’ll find is that lenders will consider certain criteria before deciding whether or not to approve your cottage mortgage request.
Location, Location, Location
Lenders will want to assess the cottage you want to buy to determine, first, if they should lend you the money you need and to determine how much they are open to lending if your request gets the go-ahead. In addition to location, lenders will look at specific things such as the following:
- Proximity to reliable water source, which can impact the value of the property
- Access to the cottage — year-round access is preferable
- Distance between cottage and major market
- Cottage use — lenders prefer year-round, or even three-season cottages over one or two-season cottages
You will need to get mortgage default insurance if you can’t come up with a down payment of 20% or more of the cost of the cottage. Since second-home mortgages are no longer insurable by the Canada Mortgage and Housing Corporation, you will have to find a private mortgage insurance firm in the event that you require mortgage default insurance.
How Much Can You Afford?
Lenders will, of course, want to be reasonably certain that you have the financial wherewithal to repay the loan. That means you need to have the sort of income that shows that you are capable of repaying however much you want to borrow.
Options
In the event that you can’t get the full loan amount you require, you will have other options on the table. For instance, you could potentially refinance your house or tap a line of credit to supplement what the lender is willing to lend you.
Words to The Wise
Getting the cottage of your dreams will take planning if you can’t pay it off in one shot, but obtaining a mortgage is possible. When you know the key factors to getting a mortgage for a cottage, you’ll be that much closer to enjoying your new cottage.
For help and more information Contact Andrea Meynell
(Northwood Mortgage lic 10349)
Wednesday, October 21, 2015
Bank of Canada Rate Announcement - 21 October 2015
Bank of Canada maintains overnight rate
Yet again, the Bank of Canada has opted to keep the target for the overnight rate steady at ½ percent-meaning variable rate mortgages won't be moving any time soon.
The Bank attributed it's move (or lack thereof) to weaker-than-expected global economic growth and uncertainty surrounding China's transition to a slower growth path (which is putting downward pressure on energy prices). The US economy, on the other hand, is continuing to pick up steam-which is good news for Canadian exports.
Canada's economy has rebounded from the recession we were experiencing earlier this year. Non-resource sectors are benefiting from previous monetary policy actions and depreciation of the Canadian dollar, the Bank says. Households are continuing to spend at a moderate pace. Lower prices for oil and other commodities, however, are dampening business investments and exports in the resource sector.
It's these lower oil and commodity prices that are causing the Bank to revise its economic growth forecast for 2016 and 2017. Now, the Bank projects real GDP will grow by just 1% in 2015 before firming to about 2% in 2016 and 2.5% in 2017. The Bank is now saying the Canadian economy will return to full capacity by mid-2017.
If you have any questions about your variable rate mortgage-or even your fixed-rate mortgage-please don't hesitate to reach out to me. If you want to read the Bank of Canada's announcement in its entirety, you can read it here:
http://www.bankofcanada.ca/2015/10/fad-press-release-2015-10-21/
Yet again, the Bank of Canada has opted to keep the target for the overnight rate steady at ½ percent-meaning variable rate mortgages won't be moving any time soon.
The Bank attributed it's move (or lack thereof) to weaker-than-expected global economic growth and uncertainty surrounding China's transition to a slower growth path (which is putting downward pressure on energy prices). The US economy, on the other hand, is continuing to pick up steam-which is good news for Canadian exports.
Canada's economy has rebounded from the recession we were experiencing earlier this year. Non-resource sectors are benefiting from previous monetary policy actions and depreciation of the Canadian dollar, the Bank says. Households are continuing to spend at a moderate pace. Lower prices for oil and other commodities, however, are dampening business investments and exports in the resource sector.
It's these lower oil and commodity prices that are causing the Bank to revise its economic growth forecast for 2016 and 2017. Now, the Bank projects real GDP will grow by just 1% in 2015 before firming to about 2% in 2016 and 2.5% in 2017. The Bank is now saying the Canadian economy will return to full capacity by mid-2017.
If you have any questions about your variable rate mortgage-or even your fixed-rate mortgage-please don't hesitate to reach out to me. If you want to read the Bank of Canada's announcement in its entirety, you can read it here:
http://www.bankofcanada.ca/2015/10/fad-press-release-2015-10-21/
Wednesday, October 7, 2015
Will a Down Payment Make a Good Wedding Gift?
How many toasters does one couple need? The answer is probably one.
If you have a close friend or family member who is tying the knot, you
may be unsure what to get them. Nowadays, couples have been renting a
home together for a few years prior to getting married. They already
have toasters and other appliances so when it comes to setting up their
registry people are choosing a different path: a down payment for their
first home. Many families and cultures already do this, so don't worry.
It’s likely that you can’t pay for your friend’s dream house
altogether, but you can get them one step closer to home ownership. This
is called crowdsourcing or crowdfunding, and it’s becoming a less
costly way to get newlyweds into their first home faster than before.
Gifting a Down Payment:
If your friends haven’t registered anywhere and are thinking of it, talk to them about how crowdsourcing can help bring them closer to home ownership. Many wedding guests are eager to give monetary gifts, and there are many websites that can make it easy for them to accept digital gifts. Whether it’s a cheque or a payment made VIA website that gets deposited directly in to a savings account dedicated towards a down payment, this route is far more beneficial than your average gift of china and silverware.
For those getting hitched:
Sites like Hatch My House, Feather the Nest, and Down Payment Dreams make it easy for you to create your down payment registry. Most wedding gift down payment sites operate through PayPal and are fast and simple to set up. You can allow your guests to contribute any amount they’d like, or you can set a suggested amount for each guest.
It’s important to keep in mind that your older relatives may not be so keen or understand how to use the Internet to send you a wedding present, and some people simply like the idea of giving personal gifts. Either way, remain positive and appreciative of any and all gifts coming to you for your wedding!
There are fees involved with any crowdsourcing you will do but these fees are pretty standard (5-8% of what you raise), but this will still leave you with an ample down payment for your dream home. There are ways around them, like doing it the old fashioned way with cash, or by having a friend manage it with a special bank account.
The CMHC has restrictions that apply when you are gifted a down payment, but we can discuss what this means in more detail. For more information, Contact Andrea Meynell.
(Northwood Mortgage)
Gifting A __________________
Down Payment
Gifting a Down Payment:
If your friends haven’t registered anywhere and are thinking of it, talk to them about how crowdsourcing can help bring them closer to home ownership. Many wedding guests are eager to give monetary gifts, and there are many websites that can make it easy for them to accept digital gifts. Whether it’s a cheque or a payment made VIA website that gets deposited directly in to a savings account dedicated towards a down payment, this route is far more beneficial than your average gift of china and silverware.
For those getting hitched:
Sites like Hatch My House, Feather the Nest, and Down Payment Dreams make it easy for you to create your down payment registry. Most wedding gift down payment sites operate through PayPal and are fast and simple to set up. You can allow your guests to contribute any amount they’d like, or you can set a suggested amount for each guest.
It’s important to keep in mind that your older relatives may not be so keen or understand how to use the Internet to send you a wedding present, and some people simply like the idea of giving personal gifts. Either way, remain positive and appreciative of any and all gifts coming to you for your wedding!
There are fees involved with any crowdsourcing you will do but these fees are pretty standard (5-8% of what you raise), but this will still leave you with an ample down payment for your dream home. There are ways around them, like doing it the old fashioned way with cash, or by having a friend manage it with a special bank account.
The CMHC has restrictions that apply when you are gifted a down payment, but we can discuss what this means in more detail. For more information, Contact Andrea Meynell.
(Northwood Mortgage)
Wednesday, September 30, 2015
What is a Starter Home?
If you’re looking to purchase your first home but aren’t looking to
buy a five-bedroom palace, you could benefit from a starter home.
A starter home is a smaller dwelling (like a two-bedroom house or condo) that is better suited to newlyweds and people just starting out. It is ideal for young people who are purchasing their first home because the smaller size of the home makes it less expensive to buy than a house with a many storeys, front and backyard, and two-car garage.
The term “starter home” comes from the period following the Second World War where younger couples were looking to purchase a home to live in for a few years before they became parents and needed to move to somewhere that could accommodate their growing family. Additionally, people found it was cheaper to buy a small home than continue to rent their current apartment.
In today’s economic climate, people often stay in their starter homes for over 10 years. Families are getting smaller – generally 1-2 children – and people want to remain in bigger cities close to where they work. By staying in your starter home for many years, you are also able to save more money for your nest egg. The more capital you put away in the present, the better prepared you are for the future.
If you’re looking for a starter home there are some factors you should consider before you purchase:
(Northwood Mortgage Lic.#10349)
A starter home is a smaller dwelling (like a two-bedroom house or condo) that is better suited to newlyweds and people just starting out. It is ideal for young people who are purchasing their first home because the smaller size of the home makes it less expensive to buy than a house with a many storeys, front and backyard, and two-car garage.
| What is a starter home? |
The term “starter home” comes from the period following the Second World War where younger couples were looking to purchase a home to live in for a few years before they became parents and needed to move to somewhere that could accommodate their growing family. Additionally, people found it was cheaper to buy a small home than continue to rent their current apartment.
In today’s economic climate, people often stay in their starter homes for over 10 years. Families are getting smaller – generally 1-2 children – and people want to remain in bigger cities close to where they work. By staying in your starter home for many years, you are also able to save more money for your nest egg. The more capital you put away in the present, the better prepared you are for the future.
If you’re looking for a starter home there are some factors you should consider before you purchase:
- Work with a broker Being a first-time homebuyer can be tough. Where do you look for funding? How much down payment do you need? What are closing costs? A mortgage broker can not only answer all
- Consider the kids You may not have children now, but do you plan on having kids in the future? How many kids are you planning to have? A starter home can probably accommodate one or two new additions to your family, but eventually babies become children and children become teenagers who want their own rooms. If you plan on staying in your starter home for a long time, make sure you have enough space for your kids to grow up.
- Condo vs. house In Southern Ontario, condos are quickly becoming the norm for housing. In fact, many first-time buyers prefer to have a condo as a starter home instead of a house because you don’t have to worry about maintenance and there are amenities in the building like gyms and laundry rooms. You do, however, have to pay condo fees, which may not adhere to your budget.
those questions, but also help you find the best package to suit your needs.
(Northwood Mortgage Lic.#10349)
Thursday, September 24, 2015
What will today's spending mean for the future?
I sometimes wonder what the future will bring for young people trying
to establish themselves in the GTA. In some cases, their parents are
taking the hit to keep them afloat, borrowing or working longer to
support their children.
The delays getting into the workforce, or in moving up for many of these young people, also mean their life long earnings are likely to be less.
Where will that take us in the future? Debt is cheaper now, will it stay that way? The economy is not an easy thing to manage at the best of times, but when people are living longer and living life differently (borrowing and not saving for retirement, not leaving much for the children because it is being spent now) can old theories really be the grounds for making political decisions that will rebuild Canada for the future?
I think there are pieces that are not being put into the equation, and I am not sure I like where it is leading us. I REALLY hope I am wrong, but I fear it will only exacerbate the growing rich/poor divide.
"You can't take it with you," so maybe this is the ME generation going out with a bang. Like those who deny global warming, they are leaving it to the next generation to sort out. After all, they have had the best ride in the history of humankind, so why change now and why should not having enough money saved change the way they live. So raise a glass and CHEERS.
Source of the idea:
http://business.financialpost.com/personal-finance/debt/canadian-seniors-ramp-up-debt-to-soak-up-glitzier-lifestyle
The delays getting into the workforce, or in moving up for many of these young people, also mean their life long earnings are likely to be less.
Where will that take us in the future? Debt is cheaper now, will it stay that way? The economy is not an easy thing to manage at the best of times, but when people are living longer and living life differently (borrowing and not saving for retirement, not leaving much for the children because it is being spent now) can old theories really be the grounds for making political decisions that will rebuild Canada for the future?
I think there are pieces that are not being put into the equation, and I am not sure I like where it is leading us. I REALLY hope I am wrong, but I fear it will only exacerbate the growing rich/poor divide.
"You can't take it with you," so maybe this is the ME generation going out with a bang. Like those who deny global warming, they are leaving it to the next generation to sort out. After all, they have had the best ride in the history of humankind, so why change now and why should not having enough money saved change the way they live. So raise a glass and CHEERS.
Source of the idea:
http://business.financialpost.com/personal-finance/debt/canadian-seniors-ramp-up-debt-to-soak-up-glitzier-lifestyle
Wednesday, August 26, 2015
August Financial Commentary
So much has happened.
The media covered the Bank of Canada rate drop pretty thoroughly and the rather interesting (read perhaps political) failure by the chief of the Bank to use the "R" word, recession. A pretty standard definition of this term is "a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters."
In the Bank's press release it said, "Real GDP is now projected to have contracted modestly in the first half of the year, resulting in higher excess capacity and additional downward pressure on inflation." I italicized the "first half of the year" to point out that this in fact equals 2 quarters.
There has been a great deal of news since then, here are a few items of note:
China's market's have people watching and guessing about what it all REALLY means, but the bottom line for Canada right NOW is they are buying fewer of our resources and it hurts our overall economy.
Harper has declared that if re-elected he will increase the First Time home buyer RSP withdrawal limit from $25,0000 to $35,000. This is great for people who make enough to have contributed this much to their RSPs and who can pay it back on top of the cost of home ownership over the next 15 years. So this helps a small percentage of well to do buyers.
The Bank of Canada still says high personal debt, whether student loans, mortgages, car loans, credit card, or other forms debt is the biggest threat to our long term economic success and yet BMO comes out with an article about "GOOD DEBT." Good debt in this case is student and home loans, Student debt is only good if t leads to better jobs and more income, so until that is proven it is hard say it is "good" because having a large student loan and working minimum wage for years on end is not good debt for many. I think people need to be smart about debt, and do their best to use it wisely, and what that looks like for each person is a bit different, but everyone should have a plan to get OUT of debt.
Real estate values are dropping in some parts of the country which can cause problems for some, but in the short term is fine of you are planning to stay in the home.
Harper government hints at toughening up some aspect of mortgage lending before the election was called, and banks are tightening their lending practices. After the election we will see what becomes of the mortgage market.
While I do not have all the data to hand, my sense is that there will continue to be bumps in the road, but that overall the economy will tick along with no big ups or downs, we have no room for big growth because we did not fall as far as the US, and while our economy is tied to many markets there are no real signs that anything crazy is happening on the upside that should lift us significantly higher. The global situation will force the Bank of Canada to keep rates low for the foreseeable future and this will entice people to increase their debt levels, since the costs will seem so low.
Housing prices in Toronto show no signs of slowing down and as favoured areas sky rocket people will find new pockets to gentrify. A key calculation for anyone thinking of buying is looking at rent, savings, investment return vs. cost of buying, mortgage levels and likely future value of the home. Then of course there are the intangibles like feelings and personal preferences.
I do not like loosing business, but I also do not want people to get in over their heads. Check is out and think about your best options.
http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/can-you-really-afford-that-mortgage-know-your-real-life-ratio/article17333137/
If your path takes you into the market or you want to use the equity in your home to add the extra space please let me help you get the right mortgage at a great rate.
After writing this of course we had a busy start to the week with major market shifts and a record low dollar. We will see what happens over the next while, but it looks like more Bank of Canada rate drops ahead.
All the best.
The media covered the Bank of Canada rate drop pretty thoroughly and the rather interesting (read perhaps political) failure by the chief of the Bank to use the "R" word, recession. A pretty standard definition of this term is "a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters."
In the Bank's press release it said, "Real GDP is now projected to have contracted modestly in the first half of the year, resulting in higher excess capacity and additional downward pressure on inflation." I italicized the "first half of the year" to point out that this in fact equals 2 quarters.
There has been a great deal of news since then, here are a few items of note:
China's market's have people watching and guessing about what it all REALLY means, but the bottom line for Canada right NOW is they are buying fewer of our resources and it hurts our overall economy.
Harper has declared that if re-elected he will increase the First Time home buyer RSP withdrawal limit from $25,0000 to $35,000. This is great for people who make enough to have contributed this much to their RSPs and who can pay it back on top of the cost of home ownership over the next 15 years. So this helps a small percentage of well to do buyers.
The Bank of Canada still says high personal debt, whether student loans, mortgages, car loans, credit card, or other forms debt is the biggest threat to our long term economic success and yet BMO comes out with an article about "GOOD DEBT." Good debt in this case is student and home loans, Student debt is only good if t leads to better jobs and more income, so until that is proven it is hard say it is "good" because having a large student loan and working minimum wage for years on end is not good debt for many. I think people need to be smart about debt, and do their best to use it wisely, and what that looks like for each person is a bit different, but everyone should have a plan to get OUT of debt.
Real estate values are dropping in some parts of the country which can cause problems for some, but in the short term is fine of you are planning to stay in the home.
Harper government hints at toughening up some aspect of mortgage lending before the election was called, and banks are tightening their lending practices. After the election we will see what becomes of the mortgage market.
While I do not have all the data to hand, my sense is that there will continue to be bumps in the road, but that overall the economy will tick along with no big ups or downs, we have no room for big growth because we did not fall as far as the US, and while our economy is tied to many markets there are no real signs that anything crazy is happening on the upside that should lift us significantly higher. The global situation will force the Bank of Canada to keep rates low for the foreseeable future and this will entice people to increase their debt levels, since the costs will seem so low.
Housing prices in Toronto show no signs of slowing down and as favoured areas sky rocket people will find new pockets to gentrify. A key calculation for anyone thinking of buying is looking at rent, savings, investment return vs. cost of buying, mortgage levels and likely future value of the home. Then of course there are the intangibles like feelings and personal preferences.
I do not like loosing business, but I also do not want people to get in over their heads. Check is out and think about your best options.
http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/can-you-really-afford-that-mortgage-know-your-real-life-ratio/article17333137/
If your path takes you into the market or you want to use the equity in your home to add the extra space please let me help you get the right mortgage at a great rate.
After writing this of course we had a busy start to the week with major market shifts and a record low dollar. We will see what happens over the next while, but it looks like more Bank of Canada rate drops ahead.
All the best.
Tuesday, July 21, 2015
July Economic Commentary - Mortgage Rates are dropping, again
So much has happened. Sorry for the delay in getting back to the posts.
Last week as the media covered the Bank of Canada rate drop pretty thoroughly and the rather interesting (read perhaps political) failure by the chief of the Bank to use the "R" word, recession. A pretty standard definition of this term is "a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters."
In the Bank's press release it said, "Real GDP is now projected to have contracted modestly in the first half of the year, resulting in higher excess capacity and additional downward pressure on inflation." I italicized the "first half of the year" to point out that this in fact equals 2 quarters.
The rest of the piece has loads of optimism about the future growth, despsite the steep decline in the Chinese economy with the corresponding decline in demand for raw materials. It would seem the lower dollar should stimulate the other parts of the economy to help offset the decline in sales and investment in the resource sector, particularly oil and gas.
There does appear to be an improvement in the labour figures and consumer confidence is high. I often wonder if "high'' is, in part, an adjustment to the new reality, in other words have we lowered our expectations and are happy with the new norm, or does high mean we really think we will get back to spending like crazy?
On the mortgage front the rate drop is good news borrowers, particularly those of us with variable rate mortgages. It means if we keep the payments the same, we are paying down our mortgages incrementally faster, but in the long run even a few dollars more each month can make a big difference, especially if rates ever go up. While the banks are keeping some of the decrease, in January and this month they have only passed on 30 bps of the total 50 bps (or 0.50%) the Bank of Canada announced. There are any number of reasons given, but if you cannot beat them then buy the stock, since it probably means they will be making great profits this year, but then when don't they?
The other rumblings about mortgages hinge around regulations, now with the election in October, I am not sure the Conservatives are going to annoy people by tightening borrowing rules, not after they so generously bought votes this week by passing on money to parents of kids under 18, (most parties in power use similar pre-election giveaways) but the threat seems to be aimed squarely at first time buyers. They are talking about raising the minimum down payment.
While I agree first time buyers are the people taking the biggest risks relative to income compared to people selling one property to buy another. In other words they often buy as much as they can afford to get a foot in the door with as little as possible down. Why not? Most of these young people have come of age since 2008 and they do not know the days of 7-16%+ mortgage rates, and since things still look pretty bleak on the economic front around the world, then why worry about the increase? By the time a significant rate increase hits they will be in better financial shape and will own a much higher percentage of their homes. They also have a long life expectancy, and can pay it off over a long time. How else will they ever get into the market? Hope to win the lottery? Here is to hoping that the boom is not dropped lower on first time buyers.
Last week as the media covered the Bank of Canada rate drop pretty thoroughly and the rather interesting (read perhaps political) failure by the chief of the Bank to use the "R" word, recession. A pretty standard definition of this term is "a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters."
In the Bank's press release it said, "Real GDP is now projected to have contracted modestly in the first half of the year, resulting in higher excess capacity and additional downward pressure on inflation." I italicized the "first half of the year" to point out that this in fact equals 2 quarters.
The rest of the piece has loads of optimism about the future growth, despsite the steep decline in the Chinese economy with the corresponding decline in demand for raw materials. It would seem the lower dollar should stimulate the other parts of the economy to help offset the decline in sales and investment in the resource sector, particularly oil and gas.
There does appear to be an improvement in the labour figures and consumer confidence is high. I often wonder if "high'' is, in part, an adjustment to the new reality, in other words have we lowered our expectations and are happy with the new norm, or does high mean we really think we will get back to spending like crazy?
On the mortgage front the rate drop is good news borrowers, particularly those of us with variable rate mortgages. It means if we keep the payments the same, we are paying down our mortgages incrementally faster, but in the long run even a few dollars more each month can make a big difference, especially if rates ever go up. While the banks are keeping some of the decrease, in January and this month they have only passed on 30 bps of the total 50 bps (or 0.50%) the Bank of Canada announced. There are any number of reasons given, but if you cannot beat them then buy the stock, since it probably means they will be making great profits this year, but then when don't they?
The other rumblings about mortgages hinge around regulations, now with the election in October, I am not sure the Conservatives are going to annoy people by tightening borrowing rules, not after they so generously bought votes this week by passing on money to parents of kids under 18, (most parties in power use similar pre-election giveaways) but the threat seems to be aimed squarely at first time buyers. They are talking about raising the minimum down payment.
While I agree first time buyers are the people taking the biggest risks relative to income compared to people selling one property to buy another. In other words they often buy as much as they can afford to get a foot in the door with as little as possible down. Why not? Most of these young people have come of age since 2008 and they do not know the days of 7-16%+ mortgage rates, and since things still look pretty bleak on the economic front around the world, then why worry about the increase? By the time a significant rate increase hits they will be in better financial shape and will own a much higher percentage of their homes. They also have a long life expectancy, and can pay it off over a long time. How else will they ever get into the market? Hope to win the lottery? Here is to hoping that the boom is not dropped lower on first time buyers.
Thursday, March 19, 2015
March Commentary - Economy, Housing and Mortgages
Spring
is nearly here, in Toronto at least, (sorry Halifax) the snow is fast
disappearing and while the weather has graced us with a couple of warm
days we are at least seeing longer days. I love the sunshine. Maple
season is here for those heading out to the sugar bush events and houses
are being listed and sold at a searing pace, with the first 2 weeks of
March seeing 3,838 sales through MLS, an 11.8% increase over this time
last year.
The Bank of Canada has held rates down and while banks did finally drop their prime rates, 15 bps, they did not match the 25 bps the Bank of Canada announced in January. This has still been great for variable rate borrowers.
As ever the pundits are calling for the rates to stay low and to go up. While the US economy is doing well, places like Brazil and India have less momentum than they did, and if we can get around the official numbers it looks like China is slowing down more than the world had hoped.
The spillover effect of the sanctions imposed on Russia for their acts of hubris are hurting Germany, the engine of Europe, so this is going to be a lose-lose on the sanctions game, but since no one wants war with Russia and they still want to take a moral stance I guess there is still a price to be paid.
Canada is now more than ever a petro-dollar economy and so we will probably not see our dollar go back up anytime soon, the hope that other sectors would pick up has not proved as successful at offsetting the declines due to oil, as had been hoped, so the dollar is low, rates are low and in some sectors jobs are being lost. This does not suggest that we will see rate increases any time soon.
An average single detached house price in Toronto is now $1 million, a nice milestone to keep the news hounds happy, but what does this mean. A few things, 1) cheap financing 2) there is a LOT of money in Toronto, 3) people keep coming to Toronto and 4) land is finite. Developers, are now seeing the writing on the wall and are starting to invest in rental housing, they see that the long term prospects of owning a home will be further diminished as the wealth divide increases and more people will rent.
This means 2 things for the some people 1) it is a good time to invest in buying rental properties and 2) house prices are not likely to drop too much even when rates increase.
Our personal (non-mortgage) debt levels keep rising, but we seem to be managing. The government has not jumped on the banks for dropping their lending rates on mortgages this time, and Harper has indicated that they "are not planning to take any immediate action." This is good news for the real estate sector.
On a side note I have yet to see a news story where banks are dropping their credit card interest rates, but then those are not underwritten by government insurance and somehow they keep it out of the news.
Something always happens, at the moment though I do not think it will be much.
I
do not think there should be a mad rush to buy just because of the
current interest rates, while they may rise and fall a bit we are still
in crazy low territory, so take your time and buy what you want when you
can.The Bank of Canada has held rates down and while banks did finally drop their prime rates, 15 bps, they did not match the 25 bps the Bank of Canada announced in January. This has still been great for variable rate borrowers.
As ever the pundits are calling for the rates to stay low and to go up. While the US economy is doing well, places like Brazil and India have less momentum than they did, and if we can get around the official numbers it looks like China is slowing down more than the world had hoped.
The spillover effect of the sanctions imposed on Russia for their acts of hubris are hurting Germany, the engine of Europe, so this is going to be a lose-lose on the sanctions game, but since no one wants war with Russia and they still want to take a moral stance I guess there is still a price to be paid.
Canada is now more than ever a petro-dollar economy and so we will probably not see our dollar go back up anytime soon, the hope that other sectors would pick up has not proved as successful at offsetting the declines due to oil, as had been hoped, so the dollar is low, rates are low and in some sectors jobs are being lost. This does not suggest that we will see rate increases any time soon.
An average single detached house price in Toronto is now $1 million, a nice milestone to keep the news hounds happy, but what does this mean. A few things, 1) cheap financing 2) there is a LOT of money in Toronto, 3) people keep coming to Toronto and 4) land is finite. Developers, are now seeing the writing on the wall and are starting to invest in rental housing, they see that the long term prospects of owning a home will be further diminished as the wealth divide increases and more people will rent.
This means 2 things for the some people 1) it is a good time to invest in buying rental properties and 2) house prices are not likely to drop too much even when rates increase.
Our personal (non-mortgage) debt levels keep rising, but we seem to be managing. The government has not jumped on the banks for dropping their lending rates on mortgages this time, and Harper has indicated that they "are not planning to take any immediate action." This is good news for the real estate sector.
On a side note I have yet to see a news story where banks are dropping their credit card interest rates, but then those are not underwritten by government insurance and somehow they keep it out of the news.
Something always happens, at the moment though I do not think it will be much.
When you or someone you know is ready to buy, refinance or renew give me a call I will always work to get you a great deal and take advantage of the battle of the lenders to make sure you get the RIGHT mortgage at a GREAT Rate. More often than not I can get you something better than most people can find on their own.
All the best.
Friday, March 13, 2015
Debt - Inheritance - Get your affairs in order!
This article from the CBC (http://www.cbc.ca/news/business/high-consumer-debt-reflects-laissez-faire-attitude-to-borrowing-1.2988768) and others discuss the growing debt burden on Canadians. They make allowances for the fact that house prices are insane, and interest rates are also historically low, and that despite the slump in the oil sector a lot of Canadians do not feel that the economy is too bad, but the pundits still feel their is a need to worry.
Then there are other articles about the transfer of wealth, and in the case of the Maclean's article, the battles that can come with that transfer (http://www.macleans.ca/society/life/the-inheritance-wars/).
So, how much of the transfer will offset the debt? And an insufficiently covered part, until I read the Maclean's piece, was how much will the lawyers get.
There are several battles waging for the money that might be transferred. The longevity and health of the people currently holding the wealth: they may be healthy enough to spend it travelling, or need more expensive medical care. The amount that their children might have needed during the much rockier times since the 70s with more schooling, poor job markets and now, high costs of housing. Then of course there is also the philosophical position of those holding the wealth. In 2013 this article came out (http://www.businessinsider.com/tycoons-not-leaving-money-to-their-kids-2013-8?op=1) and while being taken care of by billionaire parents might be more than most would get, it is still not what the rest of us thought might happen. I also know middle class families that hold the same views, that children need to make their own way and should not rely on their parents to get ahead.
I think I lie somewhere in the middle. The world is a tough place and while I think children, young or grown, need to be able to fend for themselves and build a future and not depend on what may be left to them, I think some help is OK. Some might want to build a dynasty, or grow family wealth and set things up so that whatever you are given by your parents you must give each of your children at least that amount. If this were the case then someone must double, or triple their net worth to keep those standards if they have children. Is this done through a Trust? How can you hold people to this? I think the key thing is raising your children with the values you really want them to have, and giving them too much will definitely lead to zero motivation to succeed on their own. So what this help looks like will be different for every family, but what I can say is whatever your plans make sure you get them down on paper and make sure they cover all eventualities.
Do not forget you, or a family member, may get dementia and you should know that, in Ontario anyway, the laws are against the family in the case of a single adult with dementia. Why do I say this? If you think children can be nasty fighting over their inheritance just think about what could happen if a nice man, or woman, saw your single mother, or father, with dementia and a tidy nest egg. Maybe the Will was in place before your parent got dementia, and maybe mom, or dad cannot legally sign a contract to buy a car, but they can get married, and in Ontario at least, if they get married that Will they wrote back when they knew what they wanted, becomes NULL & VOID, and then when they die, well, I guess the lawyers could get most of it, but it certainly will not shake out the way it was planned. (In case you want to read more check out this book, it is well worth the investment if you, or your parents have any net worth that might be targeted. http://www.carswell.com/product-detail/capacity-to-marry-and-the-estate-plan/ and/or listen to the following broadcast http://podcast.cbc.ca/mp3/podcasts/ontariotoday_20150115_54711.mp3 ).
I could go on, but my belief is that we are not going to see debt ratios getting any better while interest rates are so low and housing prices remain so high. I also think despite articles warning that there may be less than one planned when parents die, and it may come later, people are still going to pretend they will rely on their inheritance to get them through their own retirement. This kind of wishful planning is not the best path so whatever your beliefs, or plans, make sure you have the paperwork and budgets in line to meet your own, and your family's goals.
Then there are other articles about the transfer of wealth, and in the case of the Maclean's article, the battles that can come with that transfer (http://www.macleans.ca/society/life/the-inheritance-wars/).
So, how much of the transfer will offset the debt? And an insufficiently covered part, until I read the Maclean's piece, was how much will the lawyers get.
There are several battles waging for the money that might be transferred. The longevity and health of the people currently holding the wealth: they may be healthy enough to spend it travelling, or need more expensive medical care. The amount that their children might have needed during the much rockier times since the 70s with more schooling, poor job markets and now, high costs of housing. Then of course there is also the philosophical position of those holding the wealth. In 2013 this article came out (http://www.businessinsider.com/tycoons-not-leaving-money-to-their-kids-2013-8?op=1) and while being taken care of by billionaire parents might be more than most would get, it is still not what the rest of us thought might happen. I also know middle class families that hold the same views, that children need to make their own way and should not rely on their parents to get ahead.
I think I lie somewhere in the middle. The world is a tough place and while I think children, young or grown, need to be able to fend for themselves and build a future and not depend on what may be left to them, I think some help is OK. Some might want to build a dynasty, or grow family wealth and set things up so that whatever you are given by your parents you must give each of your children at least that amount. If this were the case then someone must double, or triple their net worth to keep those standards if they have children. Is this done through a Trust? How can you hold people to this? I think the key thing is raising your children with the values you really want them to have, and giving them too much will definitely lead to zero motivation to succeed on their own. So what this help looks like will be different for every family, but what I can say is whatever your plans make sure you get them down on paper and make sure they cover all eventualities.
Do not forget you, or a family member, may get dementia and you should know that, in Ontario anyway, the laws are against the family in the case of a single adult with dementia. Why do I say this? If you think children can be nasty fighting over their inheritance just think about what could happen if a nice man, or woman, saw your single mother, or father, with dementia and a tidy nest egg. Maybe the Will was in place before your parent got dementia, and maybe mom, or dad cannot legally sign a contract to buy a car, but they can get married, and in Ontario at least, if they get married that Will they wrote back when they knew what they wanted, becomes NULL & VOID, and then when they die, well, I guess the lawyers could get most of it, but it certainly will not shake out the way it was planned. (In case you want to read more check out this book, it is well worth the investment if you, or your parents have any net worth that might be targeted. http://www.carswell.com/product-detail/capacity-to-marry-and-the-estate-plan/ and/or listen to the following broadcast http://podcast.cbc.ca/mp3/podcasts/ontariotoday_20150115_54711.mp3 ).
I could go on, but my belief is that we are not going to see debt ratios getting any better while interest rates are so low and housing prices remain so high. I also think despite articles warning that there may be less than one planned when parents die, and it may come later, people are still going to pretend they will rely on their inheritance to get them through their own retirement. This kind of wishful planning is not the best path so whatever your beliefs, or plans, make sure you have the paperwork and budgets in line to meet your own, and your family's goals.
Friday, January 23, 2015
Bank of Canada Announcement not really a surprise
Well, Well the New Year has brought a big surprise for the business news watchers.
Personally, have had a great start to the year and hope the same for you.
The unpredictability of the economy and what the big guys do has never been more evident than with the most recent Bank of Canada (BoC) announcement. The 1/4 point drop in rate means they are worried about the effects of the low price of oil on the Canadian economy. Granted we were reassured that the other parts of the economy e.g. manufacturing etc. are growing, and with the stronger US economy and a lower Canadian dollar it certainly opens opportunity for export growth, but this announcement means they do not expect the one aspect of the economy to pick up enough slack to offset the oil patch slow down any time soon.
The focus was on opening the lending gates to business to help them grow, and while the BoC hedged around it, the media sources jumped on the fact that people might take this opportunity to borrow and dig themselves deeper into debt. So the banks have held off on dropping personal lending rates and even those of us with variable rate debt had hoped it would mean our payments would be making a bigger dent in the principal. The banks though have taken the "general concern" and turned it into a window to boost profits as their margins improve while they save us from ourselves. Maybe a good time to up the bank stock holdings? Anyway, the rate drop does mean that while we had it pretty easy after the 2008 collapse we are going to have to pay some price for our focus on oil.
Look at the federal government, in an election year they are postponing the next budget and starting an aggressive pre-election media and phone campaign and trying to figure what they can put on the table to give to voters because the money they thought they had has evaporated. This means that even they are worried about the effects on all Canadians. So this is no small announcement.
I also listened to the Obama state of the union and while I must admit I like the guy as a orator, I also think I like the way he reached across party lines and tried to find a way to help all Americans benefit from the current growth in the US. I did not see a lot of happy Republican faces, but where before Obama was learning the job and the games and then had to be re-elected, maybe he meant it that he would use the 2 years he has left to do more of what people elected him to do the first time? If that happens it may have a spin off effect in Canada.
Why you might ask? Well if he can get people paid sick days, fair wages and maternity leave, maybe some parts of the US will have improved economies and this would further boost consumption of both US and Canadian goods, and if wages go up we may be more competitive in our labour costs. We do need to work on our productivity though.
The experts say they were caught off guard by the rate drop, and the Bank of Canada said they dropped hints and that the experts understood the effect the big drop in oil prices would have so they should not have been surprised. The BoC said this move was for insurance purposes and reminded us that the effects of a drop are never immediate ( 6 - 8 quarters to influence inflation) and that it could take a year to get back on track. They have room to go up, or down, if they still need to and with their models predicated on $60 it is going to be interesting. The recent death of the Saudi King may also lead to changes, overall it is a dramatic start to the year.
Will this help return "output to its full potential" or help "close the labour market gap?" Hard to say. I am going to agree with Michael Hlinka on this and I think there is far too much under employment and people who are in the wings with better educations and skills than the economy is putting to use. I do not think the Canadian economy is crashing and burning, but I also am not yet convinced that this one cut will give us the growth we need if governments and business do not start investing in infrastructure, growth and people. And I am not sure I see enough of that across the country to say that me might not see another rate drop.
The benefit to the consumer is delayed by banks who will not match the rate drop, and it may take time to work its way into mortgage rates, but I guess the one thing we can be sure of is that mortgage rates will not be going up soon. So if your personal economics and job prospects are good it is still a great time to buy, and a great time for those happy with where they are to pay the debts down even faster and free up that cash flow for a much freer life down the road.
The dollar remains low and this too will affect how Canadians spend their money. Higher food prices ahead.
Personally, have had a great start to the year and hope the same for you.
The unpredictability of the economy and what the big guys do has never been more evident than with the most recent Bank of Canada (BoC) announcement. The 1/4 point drop in rate means they are worried about the effects of the low price of oil on the Canadian economy. Granted we were reassured that the other parts of the economy e.g. manufacturing etc. are growing, and with the stronger US economy and a lower Canadian dollar it certainly opens opportunity for export growth, but this announcement means they do not expect the one aspect of the economy to pick up enough slack to offset the oil patch slow down any time soon.
The focus was on opening the lending gates to business to help them grow, and while the BoC hedged around it, the media sources jumped on the fact that people might take this opportunity to borrow and dig themselves deeper into debt. So the banks have held off on dropping personal lending rates and even those of us with variable rate debt had hoped it would mean our payments would be making a bigger dent in the principal. The banks though have taken the "general concern" and turned it into a window to boost profits as their margins improve while they save us from ourselves. Maybe a good time to up the bank stock holdings? Anyway, the rate drop does mean that while we had it pretty easy after the 2008 collapse we are going to have to pay some price for our focus on oil.
Look at the federal government, in an election year they are postponing the next budget and starting an aggressive pre-election media and phone campaign and trying to figure what they can put on the table to give to voters because the money they thought they had has evaporated. This means that even they are worried about the effects on all Canadians. So this is no small announcement.
I also listened to the Obama state of the union and while I must admit I like the guy as a orator, I also think I like the way he reached across party lines and tried to find a way to help all Americans benefit from the current growth in the US. I did not see a lot of happy Republican faces, but where before Obama was learning the job and the games and then had to be re-elected, maybe he meant it that he would use the 2 years he has left to do more of what people elected him to do the first time? If that happens it may have a spin off effect in Canada.
Why you might ask? Well if he can get people paid sick days, fair wages and maternity leave, maybe some parts of the US will have improved economies and this would further boost consumption of both US and Canadian goods, and if wages go up we may be more competitive in our labour costs. We do need to work on our productivity though.
The experts say they were caught off guard by the rate drop, and the Bank of Canada said they dropped hints and that the experts understood the effect the big drop in oil prices would have so they should not have been surprised. The BoC said this move was for insurance purposes and reminded us that the effects of a drop are never immediate ( 6 - 8 quarters to influence inflation) and that it could take a year to get back on track. They have room to go up, or down, if they still need to and with their models predicated on $60 it is going to be interesting. The recent death of the Saudi King may also lead to changes, overall it is a dramatic start to the year.
Will this help return "output to its full potential" or help "close the labour market gap?" Hard to say. I am going to agree with Michael Hlinka on this and I think there is far too much under employment and people who are in the wings with better educations and skills than the economy is putting to use. I do not think the Canadian economy is crashing and burning, but I also am not yet convinced that this one cut will give us the growth we need if governments and business do not start investing in infrastructure, growth and people. And I am not sure I see enough of that across the country to say that me might not see another rate drop.
The benefit to the consumer is delayed by banks who will not match the rate drop, and it may take time to work its way into mortgage rates, but I guess the one thing we can be sure of is that mortgage rates will not be going up soon. So if your personal economics and job prospects are good it is still a great time to buy, and a great time for those happy with where they are to pay the debts down even faster and free up that cash flow for a much freer life down the road.
The dollar remains low and this too will affect how Canadians spend their money. Higher food prices ahead.
Thursday, November 6, 2014
Youth are worth nothing to business if they have to work for free
The Bank of Canada Governor set off a new round of discussions about unpaid internships. I love all the coverage, but I must say that while some of the articles sound tough they are really skirting some of the really IMPORTANT points.
1) Bank leaders like Mr. Poloz and other "Lords" of industry I am sure do not have their children working for free. They probably call up a buddy at another company and get their kids on the payroll somewhere. It may be an entry level job, but it is a paid job with a future, barring massive stupidity on the part of the young worker.
2) Why is it that the young people in earlier generations took on these same mail room type jobs and got paid? In the 50s 60s and even 70s there were jobs, and they all brought about the equivalent level of skill and knowledge, for their time, to the table as the young graduates of today. Somehow businesses valued what they brought enough to pay them, sometimes not much, but it was a paycheque and a chance to prove oneself. Now, whatever work the interns are doing in the companies has no value and the students, or graduates, the companies bring on have nothing to offer, and the companies do not see them as having any potential. If they did then they would pay them right?
I understand that it will take a couple of generations to plant the seeds that this is OK, and that a form of serfdom is a way to get ahead. But even serfs were able to use some land to feed themselves and were entitled to protection, and justice. OK, so the state has taken care of the justice part, sort of, and the protection of things like OHIP, but what about the feeding part. I guess they have to work triple hours, most for free and a bit at the food counters to keep fed.
I am not seeing any great improvement from the Middle Ages in terms of treatment by the "Lords" of industry. Wage pressures continue increase the levels of poverty for those that are working, and now we are asking parents to carry the burden so multimillion dollar corporations can increase executive compensation and dividend payments to the people who can afford to own shares. (Yes, I know many of the parents' pensions benefit, but hey may never retire if they have to keep supporting their kids.)
Is anyone else seeing a problem with this?
I understand that it is an opportunity to build a resume, or try a new field, but people used to get paid to do the same work. I guess if I were an intern I would be happy to go in and observe the work of others, and see how it all came together, but the minute I actually had to do something I think it is fair to get paid. Right?
Maybe they think of this as an apprenticeship? If so, then if we are sticking with the historical references, then there was a legal agreement that the apprentice was bound to the master and got something in return.
What it was like to be an apprentice in early New England is indicated by these words from a 1640 indenture.
"Know all men that I, Thomas Millard, with the Consent of Henry Wolcott of Windsor unto whose custody and care at whose charge I was brought over out of England into New England, doe bynd myself as an apprentise for eight yeeres to serve William Pynchon of Springfield, his heirs and assigns in all manner of lawful employmt unto the full ext of eight yeeres beginninge the 29 day of Sept 1640. And the said William doth condition to find the said Thomas meat drinke & clothing fitting such an apprentise & at the end of this tyme one new sute of apparell and forty shillings in mony: subscribed this 28 October 1640." (http://www.lni.wa.gov/TradesLicensing/Apprenticeship/About/History/)
While not always treated fairly, they were housed and clothed, I am not seeing that today, that burden is shifted to the families, who may also be struggling.
We are sort of getting the points across in the media, but the media also seems to be missing a big point. Just because those who shape society want us to believe it is OK to work for free and thus also enslave our families who then have to feed and clothe us, does not mean it is actually a right and just thing. For the leader of the Bank of Canada to say this proves that he is part of the machine of mistreatment and not looking to the companies to help grow the economy.
Saving a company a few dollars is nothing compared to the value to an economy of giving any person paid employment and having them contribute to the economic life of the whole society in a meaningful way. Do not forget the more impoverished the family they less likely they are to be able to navigate the system and crime for some, even middle class youth, may becomes a more enticing future because there is money in criminal behaviour, right big companies?
1) Bank leaders like Mr. Poloz and other "Lords" of industry I am sure do not have their children working for free. They probably call up a buddy at another company and get their kids on the payroll somewhere. It may be an entry level job, but it is a paid job with a future, barring massive stupidity on the part of the young worker.
2) Why is it that the young people in earlier generations took on these same mail room type jobs and got paid? In the 50s 60s and even 70s there were jobs, and they all brought about the equivalent level of skill and knowledge, for their time, to the table as the young graduates of today. Somehow businesses valued what they brought enough to pay them, sometimes not much, but it was a paycheque and a chance to prove oneself. Now, whatever work the interns are doing in the companies has no value and the students, or graduates, the companies bring on have nothing to offer, and the companies do not see them as having any potential. If they did then they would pay them right?
I understand that it will take a couple of generations to plant the seeds that this is OK, and that a form of serfdom is a way to get ahead. But even serfs were able to use some land to feed themselves and were entitled to protection, and justice. OK, so the state has taken care of the justice part, sort of, and the protection of things like OHIP, but what about the feeding part. I guess they have to work triple hours, most for free and a bit at the food counters to keep fed.
I am not seeing any great improvement from the Middle Ages in terms of treatment by the "Lords" of industry. Wage pressures continue increase the levels of poverty for those that are working, and now we are asking parents to carry the burden so multimillion dollar corporations can increase executive compensation and dividend payments to the people who can afford to own shares. (Yes, I know many of the parents' pensions benefit, but hey may never retire if they have to keep supporting their kids.)
Is anyone else seeing a problem with this?
I understand that it is an opportunity to build a resume, or try a new field, but people used to get paid to do the same work. I guess if I were an intern I would be happy to go in and observe the work of others, and see how it all came together, but the minute I actually had to do something I think it is fair to get paid. Right?
Maybe they think of this as an apprenticeship? If so, then if we are sticking with the historical references, then there was a legal agreement that the apprentice was bound to the master and got something in return.
What it was like to be an apprentice in early New England is indicated by these words from a 1640 indenture.
"Know all men that I, Thomas Millard, with the Consent of Henry Wolcott of Windsor unto whose custody and care at whose charge I was brought over out of England into New England, doe bynd myself as an apprentise for eight yeeres to serve William Pynchon of Springfield, his heirs and assigns in all manner of lawful employmt unto the full ext of eight yeeres beginninge the 29 day of Sept 1640. And the said William doth condition to find the said Thomas meat drinke & clothing fitting such an apprentise & at the end of this tyme one new sute of apparell and forty shillings in mony: subscribed this 28 October 1640." (http://www.lni.wa.gov/TradesLicensing/Apprenticeship/About/History/)
While not always treated fairly, they were housed and clothed, I am not seeing that today, that burden is shifted to the families, who may also be struggling.
We are sort of getting the points across in the media, but the media also seems to be missing a big point. Just because those who shape society want us to believe it is OK to work for free and thus also enslave our families who then have to feed and clothe us, does not mean it is actually a right and just thing. For the leader of the Bank of Canada to say this proves that he is part of the machine of mistreatment and not looking to the companies to help grow the economy.
Saving a company a few dollars is nothing compared to the value to an economy of giving any person paid employment and having them contribute to the economic life of the whole society in a meaningful way. Do not forget the more impoverished the family they less likely they are to be able to navigate the system and crime for some, even middle class youth, may becomes a more enticing future because there is money in criminal behaviour, right big companies?
Wednesday, September 24, 2014
Financial Update from Newsletter
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.
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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