Growing to prominence in the alternative lending sphere
by Ephraim Vecina Nov 2017 Mortgage Broker News
With nearly 15 years of experience in the industry, Alfonso Casciato currently lends his talents to Street Capital Bank of Canada as the institution’s Senior Vice-President of Sales. Casciato previously served as Vice-President of Credit Operations at FirstLine Mortgages & CIBC.
Can you provide an overview of Street Capital’s situation, especially of your alternative products?
The Street Solutions (Solutions) program, which addresses the needs of customers in the uninsured segment of the mortgage market, was launched on May 23, 2017 through a small group of mortgage brokers. We are pleased to report that the introduction of the program has been highly successful, with many thanks to our launch group of broker partners. It is evident that there is a strong demand in the Canadian market for alternative mortgage solutions. We are planning a broader roll-out of the program in early 2018.
Read more: Lender goes alternative
How do your offerings help Canadians?
The Street Solutions program assists Canadians with unique financial circumstances, by applying a more practical/common sense approach to underwriting practices. The program helps Canadians who may face challenges qualifying under traditional lending guidelines, qualify for an alternative mortgage solution.
What are the problems that these client groups struggle with?
The most significant challenge that these clients face is qualifying for a mortgage under traditional lending guidelines. Additionally, it is important for these clients to obtain a mortgage with a lender who can facilitate an array of product offerings, as it provides them with an opportunity to graduate into the prime space as their mortgage reaches maturity.
In your view, what does the future hold for Street Capital?
2017 has been a year of change for the mortgage industry as a whole and specifically for Street Capital. On February 1, 2017, Street Capital officially commenced operations as a Schedule I Bank, which has strategically positioned the company for sustainable growth. More recently, we welcomed our new President & CEO, Duncan Hannay. At Street Capital, we are continuing to innovate and engage with our stakeholders in various and unique ways, always striving to provide Canadians with more financial options than ever before.
OSFI's rule changes will hurt small towns [sic, small cities]
by Neil Sharma 08 Nov 2017 Mortgage Broker News
In a bid to quell rising prices in the Vancouver and Toronto markets, the government may be causing irreparable damage in smaller cities and towns across Canada with mortgage underwriting rules, set to take effect January 1.
Shane Bruce, founder of the ACME Group of Companies, says he’s already transacting fewer mortgages; and the drop isn’t just noticeable in his base of St. John’s, Newfoundland, it’s apparent throughout the region.
“It’s certainly affected all of the markets,” Bruce told Mortgagebrokernews.ca. “A lot of these changes have just made it more difficult for borrowers to get financing. Supply and demand kicks in; if you have more supply than demand, it drives down prices. It’s been more difficult to maintain mortgage volume compared to past years.”
According to Bruce, the new 200-basis-point stress test has caused some lenders to pull out of the St. John’s marketplace, and he anticipates 2018 being slower than this year because monolines are being torpedoed by the government in favour of the charter banks.
“We maintain most of our business through the monolines, and it looks like they’re going to get affected more than charters,” he said. “We’ve always persevered, but it can get very difficult if more monolines pull out. In the smaller markets, I believe people do get more affected because we don’t have as many lenders as bigger metropolitan areas.”
What Bruce calls a “one-size-fits-all” government policy, primarily intended for the country’s largest cities, is a head scratcher.
“We don’t have a real estate supply problem like Toronto does and we certainly don’t have a growing population, and it seems like that’s what the government is focusing on while ignoring things like unsecured credit and credit card debt. There’s no rhyme or reason.”
“We’ve always found that smaller markets are more susceptible to shocks one way or the other. Just as a percentage of the overall supply in the market, they’re just more susceptible to bigger swings,” said Gordon McCallum, founder, president and CEO of Edmonton-based First Foundation, which operates all over Alberta.
“The rule changes by design depress demand and reduce buying power for consumers. When you depress demand in a small market that already has depressed demand, and there are people who have been trying to get out of that market and sell, it doesn’t do good things for that local market.”
Given the oil sector’s decline in recent years, OSFI’s rule changes come at an inopportune time for Alberta, he added. While the province may welcome government intervention for buoyancy purposes, it’s presently intruding with legislation intended for Canada’s two largest housing markets, and there will be collateral damage.
“The legislation wasn’t intended to slow an out-of-control marketplace in Edmonton or Calgary,” said McCallum. “This is the danger of nation-wide policy for a nation-wide housing market that doesn’t exist: We’re such a diverse place, with unique local markets, that it’s a pretty broad brush to be painting with.”
Mortgage seekers wonder: broker or bank?
ADAM STANLEY Special to The Globe and Mail
This “full financial service” message is what bank employees are trained to say. Today most clients go to a specialist for their investments and should do the same for their mortgage needs.
Among the many tough decisions first-time home buyers face is whether to use a mortgage broker or rely on a bank to secure a mortgage. As the housing markets in some of Canada's biggest cities continue to heat up, buyers are looking at skyrocketing prices at the same time that the federal government's concern about the situation resulted in several rule changes over the past few years, making it harder for some to get mortgages.
The latest, passed last fall, requires those who are applying for an insured mortgage to show they can afford to pay it back even if interest rates rise. This stress test uses the Bank of Canada's posted rate and means that some applicants are being approved for lower mortgages than they would have been before the rule change.
Previous rule changes included tightening lending rules for homes worth more than $500,000, lowering the amortization period down to 25 years for high-ratio insured mortgages in 2012 and tightening processes for mortgage approvals based on income, which can affect the self-employed. This has left some borrowers with less negotiating power with the banks. But even those who would easily be approved by a bank may wonder whether to turn to a bank or a broker for a mortgage.
Jessi Johnson, a mortgage broker in Vancouver and the head of Jessi Johnson Mortgage Team, says using a broker allows for clients to have a one-stop shop when it comes to playing the field with lenders.
"If you go to the bank, and if they provide their approval, they may not have the most favourable options. Or, if they simply decline the file, you have to start from scratch with another lender," he explains. "Whereas with a broker, we can take you to 40 lenders and it's only one credit check. Mortgage brokers have access to lenders that a bank doesn't, because a bank has access to just that bank."
A bank, however, can help clients paint a wider financial picture. And while purchasing a home is a large financial decision and will affect home buyers for many years, it is just a part of a larger personal banking conversation, says Nicole Wells, vice-president of home equity finance at Royal Bank of Canada.
"People are often thinking of the now, and they're not necessarily thinking of the future. They often seek the lowest rate, understandably, as this is a big expenditure. They want to make sure they're getting the best rate and the best product features and they think by going to a broker that might be possible," she explains. "But what a bank like RBC offers is an army of expertise that helps not only in the present, but in the future as well." She adds that while some smaller financial institutions and lenders may provide slightly better rates than a big bank, borrowers should think about the potential effects of future market volatility.
"A bank like RBC offers stability through the cycles, and I don't think first-time home buyers really think about that. What if there was vulnerability within the bank that a broker put them up with? With RBC, we've been here for 150 years, so we're here for them through the cycles of every part of their life," she says. "What a broker doesn't offer is things like advice on retirement, and what other goals you may have."
But while a bank creates a steady pillar for first-time home buyers to lean on, the laser-like focus on mortgages – and mortgages only – by brokers can be a key asset as well.
"In this environment over the last four or five years, and with all the government regulations and the tightening of the regulatory bodies, you really need a specialist. I do real-estate secured lending. I do mortgages. I don't do anything else," says Darren Keck, a mortgage agent with Mortgage Brokers Ottawa.
"Sometimes when people walk into a bank and see their financial advisor, sometimes that person knows mutual funds compliance, they know business banking, they know about car loans, and the ins and outs of their job. But they may do 15 mortgages a year and not 200."
There are, however, many questions that mortgage brokers would not have the capacity to answer.
Barry Gollom, vice-president of mortgages and lending for Canadian Imperial Bank of Commerce, says having someone who can provide advice on a first-time home buyer's broader financial needs, and not just on the borrowing solution for a home, is key.
"You want to ensure you're working with someone who can have that fulsome conversation, or at least bring that expertise to the table, because the discussion really needs to start long before the house hunting begins. What are your personal and financial goals? Do you have a family? Are you planning to start a family? Will you take time off work? What about retirement? What about an RESP to fund your child's education?" he says. "You have to connect with somebody who looks at it beyond just the mortgage transaction."
As with any major financial decision, buyers need to educate themselves to a certain extent.
"The whole process is very stressful without proper education," says Mr. Johnson, the mortgage broker. "There are a lot of issues that can arise, and you need to do your due diligence."
Is the government guilty of facilitating anti-competitive practice?
by Neil Sharma 07 Nov 2017 Mortgage Broker News
The Office of the Superintendent of Financial Institution’s new regulations governing underwriting practices — set to take effect at the beginning of next year — have been the source of much acrimony in the mortgage industry, and some are wondering if the federal government is deliberately sabotaging some lenders to benefit large banks.
Two industry veterans echoed each other in stating that certain lenders, like mortgage finance companies, will not be able to keep their heads above water.
Additionally, both not only questioned why credit card debt isn’t a topic of conversation if household debt is, indeed, reaching disquieting levels, but they both believe many first-time homebuyers will be precluded from entering the housing market.
Before the latest regulation amendment, the Department of Finance updated lending practices in October 2016.
“I thought last year’s changes were more than enough,” said Fisgard’s Senior Vice President of Residential Mortgage Investments & Broker Relations, Hali Strandlund-Noble. “The problem I have with that is I’m a believer that household debt being on a mortgage is something tangible. Why are they not dealing with unsecured lines of credit, credit cards at 19.99%-plus? There’s no talk about that, no talk about qualifying those people. That’s a big concern of mine. I’m okay with healthy mortgage debt.”
While Strandlund-Noble agrees that housing prices in Vancouver and Toronto need to come down, she’s confounded by the government’s one-size-fits-all policy because she sees small cities and first-time buyers being pilfered. Atlantic Canada and the Prairie provinces are among large swaths in which she sees trouble brewing.
“I would love to see [the federal competition bureau] step in and take a look,” she said. “I would have thought they would have stepped in by now, and if they don’t step in this time, especially with how it’s affecting monolines and mortgage finance companies, I don’t think they will. It’s very disappointing.”
Asked how precarious the rule changes will be for consumers, Strandlund-Noble said, “I don’t know if ‘precarious’ is the right word. It’s lack of opportunity to become a homeowner at this particular time in their life cycle of buying, selling or renting. Many will have to wait, save and maybe even get rid of some credit cards. There’s a lack of opportunity, definitely for first-time homebuyers. It’s hard enough for them to get in.”
David Mandel, president of First Source Mortgage, concurred with Strandlund-Noble about the government needing to rein in credit card companies “as opposed to telling Canadians how much they should spend on a home and where they should live.”
But Mandel also blames the government for the astronomical cost of housing because they did precious little to solve the supply issue. Given the government’s immigration policy, he believes they exacerbated the supply problem by not ensuring enough inventory was available in the marketplace.
“If you’re going to maintain a policy of steady immigration and bring in 300,000 people annually, most of whom will try to settle in the GTA, you need to deal with the supply of developable land and remove the red tape associated with change-of-use of existing lands so that builders and developers can readily convert or create infill projects to meet demand through higher density,” he said.
This can create more urban sprawl —which would be at odds with growth plans — he added.
Mandel ultimately believes lenders and consumers are getting fleeced by government policy that he says is convoluted enough to fly beneath the average Canadian’s radar.
“The banks are going to win huge at the expense of the monolines, and what we see, ultimately, that nobody is talking about, is further concentration in the banking industry in Canada,” he said. “There’s no competition for them. Unfortunately, I think that’s anti-Canadian, anti-North American, and it’s anti-competitive — and that’s wrong. I think Canadians are getting a raw, raw deal and I think it’s a little too sophisticated and widespread for the average person to understand.”
BoC in no hurry to cool down the economy
by Ephraim Vecina Mortgage Broker News
The Bank of Canada indicated it’s in no rush to cool an economy that is very close to running up against capacity constraints, citing a long list of worries ranging from gains in the Canadian dollar to risks associated with growing protectionism in the U.S.
Policy makers led by Governor Stephen Poloz left the benchmark overnight rate at 1% on October 25, after consecutive hikes at the bank’s last two decisions in July and September, and warned they will remain “cautious” when considering future hikes.
Spooked by a jump in the currency this year, the Bank of Canada is trying to curb expectations for accelerated rate increases after a growth surge over the past year eliminated the bulk, if not all, of the economy’s excess capacity.
The Canadian dollar dropped 1% after the statement, with investors pushing out odds for the next rate hike. A rate increase is now fully priced in by March, with another in September. Before the latest announcement earlier this week, investors had been fully pricing in the next rate hike in January.
In addition to a stronger loonie that is weighing on inflation and exports, the bank highlighted growing risks associated with renegotiation of the North American Free Trade Agreement, slowing housing market plus evidence of continued slack in the labour market despite recent strong economic growth. There is also some uncertainty over the impact higher interest rates will have on households given record-high personal debt levels.
“While less monetary policy stimulus will likely be required over time, Governing Council will be cautious in making future adjustments to the policy rate,” policy makers said, as quoted by Bloomberg. “The Bank will be guided by incoming data to assess the sensitivity of the economy to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.”
With this week’s drop, the Canadian dollar has declined 5.3% since peaking on September 11. The Canadian dollar is still up 7.5% since May 4, when it hit its lowest closing rate.
New mortgage rules have considerable negative impact – industry association
by Ephraim Vecina 03 Nov 2017 Mortgage Broker News
Earlier this week, Canada’s national mortgage industry association met with over 50 Members of Parliament and senior government officials to discuss the country’s persistent housing market issues.
Foremost among Mortgage Professionals Canada’s concerns were the various negative effects (upon consumers and industry players alike) of last month’s changes to national mortgage rules, along with the long-running problems of housing affordability, availability, and accessibility.
“We are concerned that the cumulative impact of recent mortgage changes are slowing housing market activity, decreasing competition and increasing costs for consumers,” MPC president and CEO Paul Taylor said.
“That said, we have been encouraged that Members of Parliament are listening to our concerns, and we continue to inform them of the positive role mortgage brokers play in the market.”
Read more: Consumers’ real estate sentiment worsens amid tighter mortgage rules
While MPC acknowledged that the rational of the recent changes was to moderate the hottest markets—which has somewhat borne fruit in the Greater Toronto Area, and “to a lesser extent” in Vancouver—latest numbers have shown that “there is evidence of reductions in housing activity, both sales and housing starts, in areas of the country that were already moderate, flat, or even declining.”
The association pointed at figures released by the CMHC, which showed that the Crown corporation’s insured volumes drastically dropped by 34% in the first half of 2017, “indicative of a reduction in home purchases by young Canadians from middle and low income families, and first time home buyers.”
“The association is concerned that the combination of the changes, and the speed with which they have been cumulatively implemented, have created some adverse effects which could cause a potentially significant decline in housing activity nationally,” MPC stated.
These trends “will be accelerated by the recent OSFI decision to add a stress test to all uninsured mortgages,” the association warned.
Flurry of activity expected before January 1
by Neil Sharma 01 Nov 2017 Mortgage Brokers News
Ambivalent consumers appear to be taking the plunge into homeownership before OSFI’s rule changes take effect on January 1.
By most accounts, homeownership will become less attainable for a sizeable portion of the consumer market by the beginning of next year, and it appears that many are less reticent about pulling the trigger on one of the biggest financial decisions they’ll ever make.
“I’ve talked to a number of realty brokers and mortgage brokers, and more so from the real estate broker side they’re seeing a flurry of activity,” said Mortgage ArchitectsPresident, Dong Lee. “They’re informing customers of the potential impact of the rule changes, so those on the border are making decisions quickly to either get into the market or wait for the market to change. So, really, you’re seeing a lot of people trying to get in before everything changes.”
Lee says Canada’s two most expensive markets, Vancouver and Toronto, will feel the mortgage rule changes the most, and are likely the two places wherein the most buyer activity will occur before January 1. But they aren’t the only places.
“I think the impact is in the bigger markets, where it’s harder to qualify for mortgages, but we’re seeing it everywhere,” he said. “I was talking to a broker in Calgary and they’re starting to see it too.”
Mortgage holders who come up for renewal in the new year may experience problems with their renewals.
“The challenge for those who come up for renewal in five years is may be that they don’t have another lender to go to,” said Lee,” so, in other words, their only option may be to renew with who they’re with. If they try to transfer or refinance somewhere else they may run into problems through qualification.
“I think another big problem is a lot of private mortgages out there, where the thought was ‘I’m going to convert them into an institutional A or Alt-A lender, those exit strategies might not be there anymore, and I think that’s more of a concern for some of those lenders out there who lend privately.”
Diane Bertolin, a mortgage agent with Unimor Capital Corporation, doesn’t expect a huge spike in business – although she has received more enquiries – but she believes mortgage agents and brokers will see a boost elsewhere.
Where I think you might see a flurry of change or business for a mortgage agent or broker is if somebody wants to refinance,” she said. “I’m sure agents will go through their rolodexes and inform clients if their purchasing power is a little better right now, or if they want to consolidate some debt or do some home renovations so that they’re not subject to stress tests if they want to be with a bank.”
Bertolin doesn’t think there’s as much incentive for consumers to act just yet because credit unions have been mum.
“We haven’t heard whether or not the credit unions are going to adopt the rules,” she continued. “When the first stress test came out, of course they had to because they were insured mortgages and they had to comply with CMHC, but with these mortgages credit unions have a lot more leeway. They’ll adjudicate them based on loan-to-value, credit history, all that stuff and they’re not subject to the Bank Act.
“They have their own stress tests, but they tend to have a lot more leeway. I think the other big winner is going to be the B lenders who have a lot more latitude, and I think the consumer will be more savvy in terms of who they deal with. I think the credit unions will be the big winners in all this at the expense of the banks.”
Getting U.S. Dollars for Less: What the Banks Aren’t Telling Canadians
By Stephanie R. Caudle
The first thing many Canadians do before crossing the border is visit the local bank and exchange their hard-earned loonies for a handful of US greenbacks. While this method of converting currency comes with the advantage of convenience, it certainly doesn’t come free. Canadians actually pay a hefty premium for the privilege of doing business with a financial institution every time they need to exchange Canadian dollars for U.S. funds.
When it comes to local currency exchange, it’s important to recognize there are two sets of exchange rates. There is the Bank of Canada published rates that you can find online and in the newspaper, then there are the exchange rates your bank actually uses when you buy U.S. cash with Canadian currency. One of these things is definitely not like the other.
The lower published rates reflect what banks use when they exchange enormous sums of money amongst themselves, the rates they charge us are typically as much as 3% higher. That’s because they add in what’s known as an exchange or conversion fee, that we don’t see. This billed to cover the cost of doing business at the retail level.
Exchange rates fluctuate from one financial institution to the next and are typically set by the individual banks themselves, because the fees included in these rates are intended to offset everything from the initial expense of buying foreign currency, to the administrative costs involved in making that currency available to us through bank branches and ATMs. Banks have a lot of administrative costs.
What many Canadians don’t realize is there’s a convenient way to get their U.S. dollars for less. If you only make the occasional cross-border shopping trip, an alternative foreign exchange option might not benefit you all that much. But for anyone who frequents the States on a regular basis, or who spends a significant amount of time there when they do go, the savings potential offered by taking advantage of a foreign currency exchange service can be significant.
Foreign exchange companies, like Knightsbridge Foreign Exchange Inc., offer lump sum online exchanges at rates that are significantly less than what the big banks charge. This is great news if you exchange your Canadian funds on a regular basis, or if you exchange large amounts of money at a time: think anyone who covers their child’s American tuition, pays the mortgage on a U.S. vacation property, or is one of the millions of Canadians who travel to Florida each winter.
In the case of a company like Knightsbridge, effectively competing with the big boys means combating the banks’ huge, hidden fees with exchange rates that are as much as 1.5% to 2.5% lower - even after the firm’s low commission fee is tacked on.
“The banks have an oligopoly and don’t compete on price, we are keeping them honest and helping Canadians save,” according to Rahim Madhavji, president of Toronto’s Knightsbridge Foreign Exchange, a firm he co-founded after quitting his job at the Royal Bank of Canada in 2009.
The entire premise is based on an ability to buy foreign currency in bulk, just like the banks do. Regardless of your bank’s rate, Knightsbridge guarantees they will beat it, and they will do it while offering same-day delivery of funds through bank transfers or online bill payments.
The basic process for working with Knightsbridge involves setting up a free online account, receiving written confirmation of your exchange rate before funds are transferred, then having the converted funds sent to the desired destination. Knightsbridge is also integrated with all Canadian banks, meaning that account-to-account transfers are free. According to Madhavji, the average customer can expect to save anywhere from a couple of hundred to several thousand dollars, depending on the amount of money exchanged.
The Canadian Snowbirds Association is another service that offers better-than-bank rates through online transfers. Much like Knightsbridge, the Snowbirds buy currency in bulk, but they do it by pooling their participants’ resources each month to get better exchange rates. The Association’s monthly transfer program involves moving money from your Canadian bank account to your U.S. bank account. They then charge members and non-members alike a transaction fee to facilitate this, as well as a fee to enroll in their program.
Knightsbridge offers a monthly currency buying program too, but the firm also gives customers the flexibility to purchase U.S. dollars any day of the week. For added convenience, you can register to be notified remotely whenever the dollar reaches a more favorable level.
It may be true that the ball is firmly in the banks’ court when it comes to the setting of U.S. exchange rates, but companies like Knightsbridge are putting the power of bulk buying into the hands of the individual, and in doing so, are giving Canadians the opportunity to beat the banks at their own game.
Follow Stephanie R. Caudle on Twitter: www.twitter.com/stephrcaudle
10 ways to actually bring fair tax relief to Canada’s middle class
The Trudeau government’s unpopular reforms for small business won’t level the playing field in Canada. But these ones will
By Evelyn Jacks -
Evelyn Jacks is Founder and President of Knowledge Bureau, a national educational institute for the continuing professional development of tax and financial advisors and author of 52 books on the subject of tax preparation, planning and wealth management for Canadian families.
Finance Minister Morneau wants to help the middle class prosper and make the tax system fairer. As we have seen, many Canadians don’t believe the Liberals’ current plan to remove small business tax loopholes will make things fairer. I explained why these proposed changes are getting a negative reaction in an earlier column. Now it’s time to suggest some specific alternatives Morneau could consider that would bring more immediate results:
- Collect only the right amount of tax, but no more. It was not so many years ago that the average tax refund was under $500. But today, it’s over $1,700 per person per year. That’s $3,400 per household, assuming two adult workers. By reducing the amount of taxes taken at the source, the government would accomplish something remarkable: more milk money would flow through to middle class wallets every two weeks. There would also be more after-tax cash flow to fund RRSPs, which, in turn, would increase available tax credits.
- Tax only discretionary income. Increasing the basic personal amount to truly reflect non-discretionary spending on necessities would immediately take some low income earners off the tax roles, while providing tax relief to the working poor.
- Put a surtax on high income. For all taxable incomes over $250,000, a surtax would make simple sense, especially to offset the effects of a higher basic personal amount.
- Allow for income averaging. One-time windfalls should not be subject to high marginal rate taxes; rather by averaging income over three to five years, people who work hard and earn a bonus at the peak of an economic cycle, won’t lose half of it —or more— to taxes.
- Reduce clawbacks. Marginal tax rates as high as 60% to 80% result when middle-income earners find their refundable or non-refundable tax credits are being clawed back. Income thresholds for clawbacks should be higher, to help more middle class families benefit from income redistribution.
- Provide a tax credit for children under 18. Discretionary income —and standards of living— are affected when there are dependants to feed and put through school. Our tax system should have a tax credit for the cost of raising children; it doesn’t at this time.
- Adjust capital gains for inflation. Governments win by taxing inflationary gains on capital assets. That’s not fair. Cost bases should be adjusted to account for only real gains, after inflation is taken into account for the holding period.
- Tax a single income source only once. Private business owners should not be subject to tax more than once on income earned in the corporation and then flowed through to individual hands. A better option is to use the tax system to incent smaller companies and start-ups to invest to grow, and add a surtax onto the incomes of mature companies with high retained earnings. Governments should never be able to reach back and recharacterize income sources – or second guess business acumen – to extract more tax dollars from enterprises that have managed to survive the difficult years.
- Address family income splitting. Families make financial decisions as an economic unit; this should also be the taxing unit. The current round of tax reforms don’t address this. It’s a missed opportunity that would also eliminate the distortions the “reasonableness tests” on family labour and capital contributions and “income sprinkling” proposals will foist on the efforts of Canadian small business owners.
- Raise the GST/HST Tax Credit and perhaps the GST/HST. High income taxpayers have more discretionary income to spend than lower earners, who use most of their income to fund non-discretionary costs. Sales taxes are a great way to make high-income earners pay more, especially on luxury goods. However, to avoid regressive taxes for low- and middle-income earners, any increase in sales taxes should be offset by a raise in the refundable tax credit for GST/HST.
And a bonus:
Allow for the deduction of tax and financial planning fees from all income. With the storm of complexity and uncertainty that appears to be coming at us, it’s the least the government can do.
Canadians already feeling mounting pressure from higher interest rates
by Ephraim Vecina 24 Oct 2017 Mortgage Broker News
According to the results of a new poll conducted by a leading insolvency firm, fully one-third of Canadians indicated that they are already feeling the pinch of increasing interest rates.
A significant proportion of the respondents in the MNP Ltd. survey also indicated fears about additional increases. 40% stated that they will be in financial trouble if interest rates go up further, and 46% said that they are concerned about their ability to service their debts in the current environment of rate increases.
Most crucially, 28% admitted that rising interest rates could move them towards bankruptcy.
“It’s clear that people are nowhere near prepared for a higher rate environment. The good news is that there seems to be at least the acknowledgement now that rates are going to climb which might make people reassess their spending habits – especially using credit,” MNP president Grant Bazian said.
Compared to the last edition of the poll in June 2017, the average Canadian is now saying they have $149 less at the end of the month after paying bills and debt obligations, although their perceived ability to absorb a 1% interest rate increase improved only slightly. The respondents’ confidence declined sharply when asked about their ability to absorb $130 in interest payments on debt.
“People are far less optimistic when we actually break down the potential dollar amount increase in debt servicing costs. This indicates that many haven’t done the calculations or they don’t understand specifically how rate increases will impact their payments,” Bazian explained.
“Small rate hikes don’t radically change household finances. The point here is that heavily-indebted Canadians, many of whom have no emergency savings, already don’t have enough money to cover their basic living costs. They’ve been using credit to make ends meet. In a higher rate environment, their lifestyle becomes unaffordable.”