Canadians are just $200 away from being overwhelmed by debt, new survey finds
More than half of Canadians are now within $200 of being unable to handle their monthly costs, a new debt survey shows.
In yet another indication of the mounting debt many Canadians are taking on, MNP Debt, part of the personal insolvency business of Calgary-based MNP LLP, said 56 per cent of those polled — up from 48 per cent surveyed six months ago — are close to facing negative cash flow should they take on up to another $200 in monthly debt.
The online survey of of 1,502 Canadians conducted between Sept. 6 and Sept. 12 also found 31 per cent are already not paying their bills on time, making them technically insolvent, MNP says.
A survey this month from TransUnion found 718,000 Canadians can’t even absorb a 25-basis point increase in interest rates without being in a negative cash flow situation. One percentage point would drive 917,000 over the edge, the credit rating agency found.
In another recent study, the Canadian Payroll Association said 48 per cent of Canadians couldn’t make ends meets if they missed just one paycheque – a dire picture of a country living paycheque-to-paycheque.
Canadians are showing no signs of slowing down their debt consumption. The latest numbers from Statistics Canada indicate household debt as a ratio of disposable income rose to 167.6 per cent in the second quarter from 165.2 per cent in the first quarter.
Porter said about 70 per cent of debt is tied up in mortgages and tied to booming housing markets. But in general there might be a sense of “the boy who cried wolf” when it comes to getting consumers to believe they could face a jump in interest rates, which stand at 2.7 per cent for a loan tied to the prime lending rate.
MNP said there is some positive news about debt costs. More Canadians now say they are concerned about their debt —52 per cent, up from 43 per cent six months ago.
“It’s actually positive to see that a growing number of Canadians are concerned. Many households have come to rely on cheap credit in order to cover expenses, but we can’t continue to be comfortable taking on more credit to finance a lifestyle we can’t afford,” said Grant Bazian, president of MNP Debt.
Scott Hannah, the chief executive of the Vancouver-based Credit Counselling Society, said every study makes him a little more anxious about the abilities of Canadians to handle an interest rate hike.
“I think consumers are safe in the short-term, but in dangerous territory in the mid-term,” he said. “A lot of people are at the point they just have so little ability to make change because of their debt levels.”
source: http://business.financialpost.com/personal-finance/debt/canadians-are-just-200-away-from-being-overwhelmed-by-debt-new-survey-finds
Which renovations go right to your bottom line?
Which renovations go right to your bottom line?
Whether you are looking to buy a fixer-upper or renovate your existing home to improve the quality of life for you and your family, it’s worthwhile to understand which home renovations can help boost the value of your home and go straight to your bottom line. According to the Appraisal Institute of Canada (AIC), the top 4 renovations with the highest return on investment (ROI) include:
- Updated kitchen - The kitchen is almost always the heart of the home, so it’s no surprise that kitchen renovations consistently provide the best return on your renovation investment. If payback is important to you, keep the project in line with the style and quality of the rest of the house and neighbourhood.
- A sparkly bathroom – Bathroom renovations are also very reliable when it comes to boosting the overall value of your home.
- Fresh painting - Whether it's inside or outside, a fresh coat of paint can work wonders on the overall impression of your home. If you are looking to sell, choose neutrals that have wide-ranging market appeal.
- Focus on decor – Updating lighting and plumbing fixtures, counter tops, and replacing worn flooring or refinishing hardwood floors are also definite ROI winners.
Of course it’s also important to budget for those renovations that are necessary just to maintain your home’s worth. According to the AIC, it’s essential to replace the roof, update heating/cooling systems and replace windows/doors as they near the end of their life expectancy.
The AIC also lists finishing the basement, garage improvements, sun rooms and other additions, decks and fences, and landscaping as the top renovations that generally offer the highest enjoyment value.
If you’re thinking renovation, let’s talk. I can help you finance your reno so you can maximize your bottom line and personal home enjoyment. If you’re buying and planning immediate renovations, I can bundle the cost of your planned renos right into your mortgage: so instead of sky-high credit card and line of credit bills, you’ll have your mortgage and renovations looked after in one easy monthly payment.
Big bank slashes jobs
Big bank slashes jobs: Bank of Nova Scotia eliminated 827 jobs since the end of April, mostly in its Canadian business, as the lender reorganized to adapt to consumers embracing digital technology.
Jobs lost
The company had 88,783 workers in the fiscal third quarter, which ended July 31, down from 89,610 in the second quarter, when the bank took a C$278 million ($213 million) restructuring charge to cover the cost of job cuts and other productivity measures. The Toronto-based bank had 1,571 fewer employees than a year ago, a 1.7 percent reduction, according to financial disclosures Tuesday.
CEO Comments
Chief Executive Officer Brian Porter said in April that he’s reorganizing to address “significant ongoing shifts” by consumers toward banking by mobile phones, tablets and computers while streamlining the lender’s operations. Those efforts included unspecified job cuts across the firm, including Canadian banking and wealth management, as well as 400 jobs in information technology.
The Banking Sector
Canadian banking had 25,436 employees at the end of April, down 929 from the second quarter, while international banking had 114 fewer workers. The capital-markets business was up five employees to 2,587.
Bank of Montreal was the only other company among Canada’s five biggest banks to reduce its ranks in the third quarter, with 102 fewer employees since the end of April, according to financial statements.
Big bank slashes jobs
source: http://www.mortgagebrokernews.ca/business-news/big-bank-slashes-jobs-212970.aspx
GET READY FOR TOUGHER MORTGAGE RULES
GET READY FOR TOUGHER MORTGAGE RULES: Homebuyers should expect tougher mortgage rules to fully kick in by January 1, 2017.
That’s because the Office of the Superintendent of Financial Institutions (OSFI) has released for public consultation revisions to its Capital Adequacy Requirements Guideline (CAR).
Statement
OSFI says, “[This] guideline provides a framework for assessing the capital adequacy of federally regulated deposit-taking institutions. ... and [it’s] updated periodically to ensure that capital requirements continue to reflect underlying risks and developments in the financial industry,” which includes the Canadian mortgage market.
Along with other revisions, says OSFI, “the draft CAR Guideline has also been updated to include planned revisions to the treatment of insured residential mortgages. […] These changes aim to reinforce the need for banks to exercise prudent underwriting and proper due diligence when originating insured mortgages.”
Moneysense reports
As MoneySense reports, this means “the nation’s financial regulator, banks and lenders that offer mortgage financing will face stricter regulations and this will translate into tougher lending rules for homebuyers.”
In a letter to the industry from December 2015, OSFI highlights that risks in Canada’s mortgage market comtinue to evolve. With household debt growing faster than income and real estate prices heating up. At that time, it announced plans to propose changes to help protect Canadians and financial institutions.
For more information on this or other Ottawa mortgage relates topics contact Kelly Wilson Ottawa Mortgage agent.
GET READY FOR TOUGHER MORTGAGE RULES: Source: http://www.advisor.ca/news/industry-news/get-ready-for-tougher-mortgage-rules-211706
Bank of Canada Announcement Sept 7 2016
Good morning
So school is back and the lazy days of summer are behind us…are you feeling a little gloomy… if so, let me cheer you up with some good news…
Prime rate remains the same
As you know, your variable rate mortgage, line of credit and/or student loans are all based on the Prime Rate and here is your personal update from me on the recent Bank of Canada announcement on changes to their Overnight Rate which in most cases impacts your Prime Rate.
Latest announcement
At 10:00 am EST, Wednesday September 7, 2016,the Bank of Canada again maintained their overnight rate which in essence means no change to your interest rate. I feel like I have been repeating myself over and over again as they haven’t increased the rate since July 2007 – nine years ago! You continue to benefit from low rates but I have a question for you… have you REALLY made the most of the low payments you have had? How much do you have saved up or how closer are you to your mortgage burning party because you have made extra payments on your mortgage? Or maybe you just got a little carried away and have some high interest credit card debt that you can’t seem to pay off in full each month.
Create a financial plan
Don’t worry, if you aren’t as far ahead as you would like to be, we can work together to create a plan to get you back on track… so back to school isn’t just for the kids…us adults can benefit from going to back to the drawing board with our finances, savings and future financial wealth goals. I’d like to offer you a 20 minute pro bono consultation to see what we can do to help hit those wealth goals and dreams for you and your family. Get a clear financial outlook,avoid expensive debt and it won’t be just the leaves that are falling in a month or two, but the amount of unnecessary interest and debt you have as well… let’s get you closer to that Mortgage Burning Party! It’s never too late to start planning. Maybe this doesn’t apply to you but you have a friend or family member that we could help, feel free to share this information with them.
Excerpt from the announcement
To continue with the Bank of Canada news, here is an excerpt of the announcement and what they had to say about their decision today:
“Global growth in the first half of 2016 was slower than the Bank had projected, although the Bank continues to expect it to strengthen gradually in the second half of this year. The US economy was weaker than expected in the second quarter, notably reflecting a contraction in business and residential investment. While a healthy labour market and solid consumption should remain supportive of growth in the rest of the year, the outlook for business investment has become less certain. Meanwhile, global financial conditions have become even more accommodative since July.
Canadian exports disappoint
In Canada, exports disappointed even after accounting for weaker business and residential investment in the US, adjustments in the resource sector, and cutbacks in auto production. The economy is expected to rebound in the third quarter as oil production recovers, rebuilding commences in Alberta, and consumer spending gets an additional lift from Canada Child Benefit payments.”
Potential rebound
The Bank of Canada is projecting a substantial rebound in the economy in the second half of this year. It is still anticipated that rates won’t start increasing until well into 2016 even early 2017. Remember, that any increase to the prime rate since 1992 has only been by 0.25% at any ONE time, so you won’t see a large significant increase all at once.
Fixed rates
Fixed rates haven’t really changed at all since the last announcement, and are around 2.39% for a five-year fixed term.
Based on this recent announcement, and the anticipation that the prime rate will still remain low for a while now, unless you feel otherwise, I’d recommend that you remain with your current variable rate product as the interest is lower than a fixed term rate right now. However, if having a fixed payment is important to you, call me so I can calculate what your new payment would look like and also if it is suitable for you. I’ll be in touch again for the next announcement on October 19, 2016.
I wonder if I can ask a favor, going with my theme of “Let the sun set and the leaves fall along with Canadian consumer debt with our help” if you hear a friend or family member talk about going thru a financially tough time – maybe I can help with some budgeting, credit counselling and debt consolidation options for them. In either of these cases, would you mind passing my contact information on to them – this is very much appreciated.
Kelly Wilson 613-695-9250 Top 1% Canada Mortgage Agent
5 ways to plug the money leaks!
5 ways to plug the money leaks!
The brisk back-to-work attitude of September makes it a great time to review your finances and particularly your spending. Whether you are saving to buy a home or pay one off, your “money leaks” can add up to some big bucks over time. Here are five ways to find some of your missing money:
- Spending while unconscious. Track your spending and consider your impulse buys at the grocery, gas station, convenience and other stores; the services you are being charged monthly for that you don’t really use; or your brand name buying when generic will do. Look for the leaks, and then resolve to spend consciously. If impulse buying is a big culprit, always make a list and stick to it, only grocery shop once a week and never on an empty stomach!
- Convenience costs. It’s a lot easier to spend more than you intend to when you exclusively use your credit cards because you aren’t seeing the money. You just press some buttons and presto, your purchase is made. You might not be so liberal with your money if you actually had to hand it over. Consider withdrawing a fixed amount of cash for your spending every week.
- Examine your bills. Take a good hard look at your monthly bills and go through them line by line. Look for small, unexplained charges, fees, and add-ons. Some of them may be for services you don’t use or perhaps don’t remember requesting. Or they could be for services that you can actually live without. Even if the amount is small, why have it charged every month?
- It doesn’t hurt to ask. Whether you are signing up for internet or buying a car, ask “is this the best you can do?” or “can you make it more affordable?” Do research in advance so you are prepared and knowledgeable on all things related to what you are buying.
- Plug your biggest money leak: high interest. All of the savings you make in lifestyle choices mean nothing if you don’t put a plug on paying high interest. Always pay down your credit cards as much as possible. If debt is choking your cash flow and you have enough equity in your home, you may be able to move that debt to your lower-rate mortgage and save thousands. If high interest debt is a big money leak for you, get in touch. Using home equity to pay down debt is one of my specialties.
A peek behind deeply discounted 5-year rates
A peek behind deeply discounted 5-year rates
When considering a deeply discounted 5-year rate, keep in mind that cheapest isn’t always best. Strangely, we know that’s true when we’re shopping for anything else - but we still tend to believe that lowest rate is the one and only factor in choosing a mortgage. But, that low-rate mortgage could actually cost you more in the long run.
Cut rate mortgages
An amazing cut-rate mortgage could have you locked in to a very rigid contract filled with financial “trip lines” that could work against you down the road. That’s why it’s important to check the fine print.
Fully closed
For instance, is the mortgage fully closed? That means you’re not leaving the lender unless you sell your house, so your options are limited and you have no negotiating power if your needs change in the next 5 years.
Low or no repayments
Low or no prepayments: means you have no or limited ability to chip away at your principal to reduce your overall cost.
Amortization
Maximum 25-year amortization can take away flexibility you may need later. Many prudent homeowners take a 30-year amortization but set their payments higher using a 25-year or lower amortization. This gives them the option to reduce their payments should an emergency arise or a special need like maternity leave. For first-time buyers too, a 25-year amortization means higher payments than a 30-year amortization and could limit their entry into the market.
Spot a deeply discounted 5-year rate? Talk to us first. We’ll always help you find the right combination of low rate with the options you need to achieve your goals for home ownership and the financial future you want.
For in-depth info on the best mortgages today contact Kelly Wilson.
This is the Homebuyer of the Future
This past June, Mortgage Professionals Canada published their survey results on the Next Generation of Homebuyers; adults under the age of 40 who don’t currently own a home but expect to own in the future. If you are planning on buying, or help a child get into homeownership, these results can be an interesting comparison to your own situation. Here are some of the key findings:
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52% are under 30 years old, 48% aged 30 to 39
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55% singel, 39% married/living with a partner
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81% have no children
- 72% agree that mortgages are good debt, and 76% agree real estate is a good long-term investment. 58% are optimistic about the economy in the next 12 months.
- The decision to buy is often influenced by key life events – start a family (33%), getting a promotion/raise (30%), getting married (29%), inheritance (8%).
- Primary downpayment sources are personal savings (73%), gift/loan from a family member (36%), TFSA (33%) and RRSP (29%).
- Average downpayment savings is $37,000 among imminent buyers.
- Neighbourhood (61%), safety (58%), and potential for increase in value (50%) are the most important home features. Features that are considered to be worth a premium are nice neighbourhood (33%), short commute (31%) and safety (29%).
In terms of where to source their mortgage, 59% said they will likely use a Mortgage Broker once aware of their services. The top five reasons cited for using a mortgage brokers are -
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They are experts/specialize in mortgages
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Getting the best rate
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Help you negotiate a better deal
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Access to more lenders
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Convenient, one-stop shopping
Wherever you are in your homeownership journey, I am here to answer your questions and help you find the right mortgage, with the rate and flexibility you need to be a happy homeowner.
Seven signs you may need a mortgage tune up
Seven signs you may need a mortgage tune up
Did you know that just like your car or your home, you mortgage can benefit from a seasonal inspection! Your car gets taken in for regular servicing to keep it running for the long term, shouldn’t your financial future get the same kind of attention?
Here are seven common signs you need a mortgage tune-up:
- You are locked in at a higher rate than you could get today – and you want a professional opinion on your options;
- You’re thinking about moving to a new home this year – or pondering buying an investment property;
- You’re carrying more than $25,000 in high-interest loans or credit cards and it’s affecting your cash flow;
- There’s a renovation or home repair project coming up this year – either by choice or necessity;
- An investment or business opportunity is available - and you wish you could take advantage;
- There’s a large expense looming – tuition, wedding – and you want to plan ahead; and,
- Your mortgage is up for renewal this year.
If you haven’t had a mortgage review in the last year – or if you recognize one of the signs that it’s time for a tune-up – then get in touch. And if you know someone who could also benefit: consider this a coupon for a free inspection for a friend or family member!
A mortgage in tip-top condition is the best way to get you where you’re going in your financial future!
Call us for more info 613 266-3570or email to kelly@wilsonteam.ca
Bank of Canada Announcement July 13 2016
Good morning
Bank of Canada Announcement July 13 2016: As you know, your variable rate mortgage, line of credit and/or student loans are all based on the Prime Rate. Here is your personal update from me on the recent Bank of Canada announcement on changes to their Overnight Rate which in most cases impacts your Prime Rate.
Update
At 10:00 am EST, Wednesday July 13, 2016, the Bank of Canada maintained their overnight rate. In essence means no change to the interest rate on your variable rate mortgage, line of credit and/or student loans. This is still good news for the amount of interest that you will pay. We also have to recognize that it is a reflection of the slow economy.
Converting into mortgage
So summer is here and there is nothing better than enjoying some time off with family! Of course the warm outdoors are great too. But is your mind racing about other possibilities; maybe converting your RSP, TFSA or LIRA into mortgages for a higher return Or buying a cottage or vacation home? Maybe renovations such as a new kitchen, finish the basement or add a pool? Or you just have a bunch of debt that you’d like to eliminate. Now is the time to get serious about looking into these options… especially as rates are still at historical lows! Chat to me about your options … I'd be happy to make those plans into reality and save unnecessary interest or even be the banker for a change!
Economy
The Bank of Canada is still concerned with the financial vulnerabilities and regional divergences underway in Canada’s economy. It is still anticipated that rates won’t start increasing until well into 2016 even early 2017. Remember, that any increase to the prime rate since 1992 has only been by 0.25% at any ONE time, so you won’t see a large significant increase all at once.
Fixed rates haven’t really changed at all since the last announcement, and are around 2.59% to 2.69% for a five year fixed term.
Next announcement
Based on this recent announcement, and the anticipation that the prime rate will still remain low for a while now, unless you feel otherwise, I’d recommend that you remain with your current variable rate product as the interest is lower than a fixed term rate right now. However, if having a fixed payment is important to you, call me so I can calculate what your new payment would look like and also if it is suitable for you. I’ll be in touch again for the next announcement on September 7, 2016.
I wonder if I can ask a favour, if you hear a friend or family member talk about going thru a financially tough time – maybe I can help with some budgeting, credit counselling and debt consolidation options for them. Also do you have a friend or family member where buying their first home is on the “wish list”, would you mind passing my contact information on to them – this is very much appreciated.
Call Kelly Wilson for more info on your options. 613 266-3570 or email kelly@wilsonteam.ca