24 Nov

The Top 10 Money Saving Tips

Lifestyle

Posted by: Yen (Frank) Feng

 

When it comes to saving money, there are a lot of little things you can do that add up to make a big difference! Here are 10 of our favourite money-saving tips:

1. Automatic savings are one of the most effective ways to save because you can’t spend what you can’t access. Instruct your employer to transfer a certain amount from your paycheck each pay period into an FHSA, RRSP, savings account (or both) or set up automatic transfers in your banking account to coincide with your payday.

2. Consolidating debt will result in a single monthly payment and lower interest costs. Many people don’t realize just how much money they are wasting on interest each month, especially if you have multiple loans or credit cards. Consolidating debt can help you gain control and maximize spend on the principal amounts to pay off loans faster.

3. Budget with cash if you have trouble with overspending or find it too easy to use your card. After your bills are paid, take out the remaining cash (spending money) and only use that. Once the cash is gone, you’re out of money until next payday! Having physical cash in hand can also help you think twice when making purchases.

4. Buying in bulk is a great way to save a bit here and a bit there when doing your regular grocery shop or purchasing other items. Know you’ll need more? Stock up at once for bulk savings, which will help you in the long run.

5. Before Buying there are two things you should always do. The first is to wait at least 24 hours and the second is to shop around. If you still want to buy something the next day, make sure you get the best price available.

6. Plan Your Meals. Most of us don’t have time to make breakfast (let alone lunch!) before we fly out the door for work. But what if I told you that getting up an hour earlier could save you over $100 a week!? Just think about how much you spend going out for breakfast AND lunch each day? Groceries are a lot cheaper and you can even prep a few days worth of meals on Sunday while you get ready for the week.

7. Think in Hours versus Dollars every time you are looking to make a purchase, especially large ones to help you understand the TIME value of money. A new $24 Blu-Ray = 1 hour of work. A brand-new mattress = 41.67 hours of work. Understanding the time that went into earning money for a purchase can help as well as reconsidering purchases of frivolous items, or looking for the best deal on necessary products.

8. Utility Savings can help you save each month. Don’t blast your A/C with all the doors in your house open, don’t pump the heat without sealing cracks and consider things like installing water-saving toilets and running cold-water wash cycles to save energy (and money!) every day.

9. Master DIY – While sometimes you can spend $120 to make a $20 item yourself, there are some things that do benefit from DIY, such installing dimmer switches, that can help save you money in the long run.

10. Save Windfalls and Tax Refunds for a rainy day. A good rule of thumb is to put 50% of bonuses, tax refunds or other windfalls into your savings account and put the rest against loans owing. While you might want to go on a shopping spree or plan a vacation, paying off your debt NOW will free you up in the future.

22 Nov

Good News On the Inflation Front Suggests Policy Rates Have Peaked

Economics Insights

Posted by: Yen (Frank) Feng

Yesterday’s inflation report showed a continued improvement, mainly due to falling year-over-year (y/y) gasoline prices. The October Consumer Price Index (CPI) rose 3.1% y/y, down from the 3.8% rise in September. There were no surprises here, so markets moved little on the news. Excluding gasoline, the CPI rose 3.6% in October, compared to 3.7% the month before. 

The most significant contributors to inflation remain mortgage interest costs, food purchased at stores, and rent. 

Canadians continued to feel the impact of rising rent prices, which grew faster (y/y) in October (+8.2%) than in September (+7.3%). The national increase reflected acceleration across most provinces. The most significant increases in rent prices were seen in Nova Scotia (+14.6%), Alberta (+9.9%), British Columbia (+9.1%) and Quebec (+9.1%).

Property taxes and other special charges, priced annually in October, rose 4.9% yearly, compared with a 3.6% increase in October 2022. The national increase in October 2023 was the largest since October 1992, with homeowners paying more in all but one province, as municipalities required larger budgets to cover rising costs. Property taxes in Manitoba (-0.3%) declined for the third consecutive year, mainly due to reduced provincial education tax.

While goods prices decelerated by -1.6% as prices at the pump fell, prices for services rose 4.6% last month, primarily driven by higher prices for travel tours, rent and property taxes. 

While grocery prices remained elevated, they also continued their trend of slower year-over-year growth, with a 5.4% increase in October following a 5.8% gain in September. While deceleration continued to be broad-based, fresh vegetables (+5.0%) contributed the most to the slowdown.

Excluding food and energy, inflation fell to 2.7% in October, down a tick from the September reading. Two other inflation measures closely tracked by the Bank of Canada–the so-called trim and median core rates–also eased, averaging 3.6% from an upwardly revised 3.8% a month earlier

Bottom Line

According to Bloomberg calculations, another critical measure, a three-month moving average of underlying price pressures, fell to an annualized pace of 2.96% from 3.67% a month earlier. It’s an important metric because Bank of Canada Governor Tiff Macklem has said policymakers are tracking it closely to understand inflation trends.

Today’s news shows that tighter monetary policy is working to bring down the inflation rate. In its Monetary Policy Report last month, the Bank of Canada expected the CPI to average 3.5% through mid-2024. Cutting its economic forecast, the Bank forecasted it would hit its 2% inflation target in the second half of 2025. 

Given today’s data and the likely significant slowdown in Q3 GDP growth, released on November 30, and the Labour Force Survey for November the following day, policy rates have peaked. Governor Tiff Macklem will give a speech on the cost of high inflation in New Brunswick today, and the subsequent decision date for the Governing Council is December 6th. The Bank’s inflation-chopping rhetoric may be relatively hawkish, but the expectation of rate cuts could spur the spring housing market.

The economists at BMO have pointed out that “three provinces now have an inflation rate below 2%, while only three are above 3%, so much of the country is already seeing serious signs of stabilization. (Unfortunately, the two largest provinces have the fastest inflation rates—Quebec at 4.2% and Ontario at 3.3%).” There is no need for the Bank to raise rates again, and they could begin to cut interest rates in the second quarter of next year.

 

Source: Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres

17 Nov

Is Your Financial Game On Point?

Mortgage Tips

Posted by: Yen (Frank) Feng

 

November is Financial Literacy Month and we have the tips to ensure your financial game is on point this Fall as we head into the New Year!

Nail Down Your Budget
Understanding the basics of budgeting and tracking your income versus spending is a fundamental part of financial literacy and control. Building a budget can help you define your spending habits, and determine where there is room for adjustments, and this gives you a chance to review your cash flow situation to ensure it aligns with your financial goals.

Ideally, your budget will fall close to the range of the following:

  • 32% of your income for housing, including property taxes, maintenance, utilities, etc.
  • 26% of your income for life, including groceries, medical, childcare, vacations, fun, etc.
  • 16% of your income for transit, including car payments, bus passes, gas, etc.
  • 16% of your income for debt, including credit cards, lines of credit, loans, etc.
  • 10% of your income for savings, including long-term planning, retirement, etc.

DOWNLOAD OUR FIRST HOME BUDGET TEMPLATE!

Dedicate Your Savings

Many individuals will have a savings account that is connected to their chequing account. This can be a bad habit, as it becomes too easy to use your savings account as a second account versus as a dedicated account for emergencies, vacation planning, or more. Ideally, you are putting 10% of your monthly income into savings whenever possible.

Live Within Your Means

This one seems simple, but it is surprisingly difficult to do – especially if you don’t have a proper budget! By putting together a budget as mentioned above, you can see where you are spending your income and how it compares to what you are bringing in. Ideally, you are adjusting your spending to ensure that you are not going over the cash flow available to you with priority expenses first, followed by leisure.

Understand Your Banking Options and Interest Rates

Having a loan with a 16% interest rate, a credit card that you’re barely making payments on, or a savings account that doesn’t give much back are all areas for consideration when it comes to truly understanding your options. Sometimes a different bank, account type, or loan type can make a big difference to your financial position. There are plenty of options, especially at mortgage renewal time, for consolidating your debt, changing your mortgage, getting a better interest rate, and more!

LEARN MORE ABOUT CONSOLIDATING DEBT!

TIPS TO PAY OFF YOUR MORTGAGE FASTER!

Check Your Credit

An annual review of your credit score and credit report is a huge part of financial literacy as this plays a key role in your overall financial status. Your credit score affects your loans, credit cards, mortgages and the interest rate you can qualify for so be sure to understand where you fall on the scale.

GET HELP UNDERSTANDING YOUR CREDIT SCORE!

Plan for Big Expenses

Are you looking to replace your car? Planning a family vacation? Need to renovate your kitchen or replace some furniture? These are all typically larger expenses that should be planned for in advance. While sometimes an appliance will break and need to be replaced, the goal is to have funds in your budget (or savings) for when things come up unexpectedly but also to plan out spending before large purchases or bookings. This ensures that when you get on that plane or drive off that car lot, you know you’re already paid!

Review Your Financial Progress

A lot of people set up a budget but then they don’t update it! Ideally, if any of your expenses change, such as an increase to your streaming services bill or utilities go up, you are updating your budget in real-time to ensure that you are keenly aware of what is coming into your account and going out. Generally, an annual review is a good idea for an overall clean-up of your budget but keeping it maintained all year long will help you get the best picture of your financial situation.

Stay Informed

When it comes to financial literacy, knowledge is power. With so many resources by your side from your mortgage broker to our Enriched Tips, Economic Insights and more it is easy to keep your finger on the pulse and be mindful of current economic changes, as well as new products or opportunities such as 40-year amortization mortgages!

Whether you’re new to financial literacy and budgeting, or simply want a refresh, taking control of your finances and better understanding your spending, cash flow and options will help you get the most out of your income.

16 Nov

Canadian Home Sales Slump Accelerates in October

Economics Insights

Posted by: Yen (Frank) Feng

 

Housing affordability is the number-one issue causing the significant decline in housing activity, adding to PM Justin Trudeau’s political problems. With the growing impact of unaffordable housing and the slowing labour market, activity in the real estate market should remain subdued for the rest of this year.

Home sales dropped 5.6% month-over-month (m/m) in October–the fourth consecutive monthly decline and the sharpest slowdown since June 2022. Sales fell in 9 of the ten provinces, notably in P.E.I. (-15.3%), Alberta (-8.3%), B.C. (-6.9%), Ontario (-5.5%), and Quebec (-5.1%), while rising 2.2% in New Brunswick. 

The actual (not seasonally adjusted) number of transactions in October 2023 was 0.9% above October 2022.

However, we have high hopes for the spring season as long as the Bank of Canada continues its rate pause. Record population growth has increased pent-up demand for housing and fixed mortgage rates have been falling owing to the US-led rally in bond markets.
 

New Listings 

Sellers move to the sidelines as well. Following the September surge in new listings, newly listed homes fell 2.3% m/m in October, the first decline since March.

With sales falling by more than new listings in October, the national sales-to-new listings ratio eased to 49.5% — a 10-year low. The highest level for this measure was 67.9%, recorded in April. The long-term average for this measure is 55.1%.

There were 4.1 months of inventory on a national basis at the end of October 2023, up a full month from its low of 3.1 months in May. That said, it remains below its long-term average of nearly five months of inventory.
 

Home Prices

The Aggregate Composite MLS® Home Price Index (HPI) declined by 0.8% m/m in October 2023. While price declines are still mainly an Ontario phenomenon, home prices are now starting to soften in parts of British Columbia. The Aggregate Composite MLS® HPI was up 1.1% on a year-over-year basis.
 

Bottom Line

The Bank of Canada policymakers are set to meet on December 6th. There is another inflation report next Tuesday, November 21, the third quarter GDP is released on November 30 and the jobs report on December 1. We expect these data will support the Bank’s rate pause. In the meantime, the rally in 5-year Government of Canada bond yields has lowered fixed-rate mortgage yields. 

US inflation, reported this week for October, came in weaker than expected, lowering longer-term yields even further. While I do not expect the Bank of Canada to cut interest rates until the middle of next year, the marked rally in market-driven rates is a welcome development for potential buyers.

 

Source: Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres
10 Nov

So You Need A Tenant

Mortgage Tips

Posted by: Yen (Frank) Feng

 

If you have a basement suite or rental property and you are currently looking for a tenant, there are some things to know. Whether this is your first tenant or you have other rental properties, it is a good idea to familiarize yourself with the specifics to ensure a harmonious tenancy.

As always, your responsibility as the landlord is to keep your rental properties in good condition and ensure they meet health, safety, and housing standards. However, as a landlord, you also have additional responsibilities around the rental agreement and tenant regulations.

Tenancy Agreement

Landlords are required to prepare a written agreement for every tenancy. Bear in mind, if this agreement is not prepared the standard terms for your province will still apply, especially if a security deposit is paid. This agreement should clearly outline the following:

  • Who the agreement is between
  • The length of the tenancy
  • Rent amount and due date
  • Required deposits (if any)
  • Pet restrictions (if any)
  • Additional terms (smoking or non-smoking, etc)

The tenancy agreement should also outline if there is the ability to add a roommate, and whether or not utilities, parking, storage, laundry, etc. are included.

Deposits

Typically, a security or damage deposit is requested by the landlord to establish tenancy and cover any unexpected issues that may arise. The deposit can be no more than half of the first month’s rent.

If you are charging a pet deposit fee, note that guide or service pets are exempt from any damage deposits. In addition, you cannot charge fees beyond the pet damage deposit.

Move In

To ensure the move-in goes smoothly, tenants and landlords should schedule a move-in time that works for everyone. At the beginning of the tenancy, you may also consider an inspection before the new tenant has moved in to ensure everyone is on the same page and the condition of the unit is clear in regard to any potential damages or fixes needed.

As a landlord, you are also responsible for changing the locks (at your cost) should the new tenant request it.

Additional Considerations

As a landlord, you will want to assess the suitability of any new tenant before signing the agreement. There are a few things you can do to ensure a smooth process and the right choice of tenant:

  • Ask for proof of identity
  • Thoroughly check all references
  • Contact previous landlords to ask about rental and payment history
  • Conduct a credit check to confirm income and financial suitability
  • Get the names of all persons to be living in the rental unit

However, keep in mind that you cannot refuse to rent to a tenant based on any discriminatory aspects such as race, gender, sexual orientation, religion, etc. In addition, you cannot refuse to rent to individuals on income assistance.

While it can seem like a lot, with the proper preparation and understanding of tenant laws and regulations in your area, you can ensure a smooth and successful rental process.

6 Nov

Weak October Jobs Report Likely Takes Further BoC Rate Hikes Off The Table

Economics Insights

Posted by: Yen (Frank) Feng

Today’s StatsCanada Labour Force Survey for October was weak across the board. Total job gains were meagre, full-time jobs fell, hours worked were flat, wage inflation eased (a bit), and the unemployment rate rose.

Employment changed little in October, up only 17,500 (0.1%), after rising 64,000 in September and 40,000 in August. The employment rate—the proportion of the working-age population with a job—fell 0.1 percentage points to 61.9% in October, as the population aged 15 and older increased by 85,000 (+0.3%).

Most notably, the unemployment rate rose 0.2 percentage points to 5.7%–its fourth monthly increase in six months and its highest level in 21 months, adding evidence to a weakening economy. The latest monthly GDP figures released earlier this week point to a flat to negative growth rate for the third quarter this year. Final data will be released later this month, but today’s numbers suggest that the overnight policy rate at 5.0% has peaked. The pace of employment gains is running below labour force growth from record population increases. It indicates that labour demand is cooling while supply is catching up quickly. The Bank of Canada expects the economy to move into modest excess supply in the fourth quarter, helping to reduce consumer price inflation. 

As unemployment has increased and job vacancies have decreased in recent months, the labour force participation rate—the proportion of the population aged 15 and older that was either employed or looking for work—has remained relatively high. The participation rate in October (65.6%) was unchanged from the previous month and up 0.2 percentage points on a year-over-year basis.

The most significant job gains were in construction, rising by 23,000, more than offsetting a decline of 18,000 in September. The most economically sensitive sectors posted job losses. These included manufacturing, wholesale and retail trade, finance, insurance, real estate, and rental and leasing, as well as accommodation and food services. 

Wage inflation continues to be troubling for the central bank. On a year-over-year basis, average hourly wages rose 4.8% in October, following an increase of 5.0% in September.

Bottom Line

The Bank of Canada meets once again on December 6th. Before then, we will see another CPI inflation report on November 21, Q3 GDP on November 30 and the November Labour Force Survey on December 1. Given the Bank’s general reluctance to hike rates just before the holiday season, the Bank of Canada will remain on the sidelines. 

Judging by today’s weaker-than-expected employment report in the US as well, the Fed will also hold their pause for the remainder of this year. 

Rate relief, however, is still many months away. The central banks will want to see inflation at 2% with the belief that it will remain there before they begin to cut interest rates. That will happen, but probably not before next summer. According to Bloomberg News, “Traders in overnight swaps brought forward their expectations for when the Bank of Canada will start loosening policy, and are now betting policymakers will cut interest rates by 25 basis points in July, from September a day ago.”

 

Source: Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres