Market equilibrium doesn't deliver on housing need
It wouldn't surprise anyone in Canada that rental housing is a minefield of problems. Whether it's the landlord that renovicts their tenant, the investor group that focuses on short-term rentals or simply the lack of suitable rental stock for all stages of life, the rental situation in Canada is in bad shape. Now a new report from the review panel on the Financialization of Purpose-Built Rental Housing has made its report public and is urging a call to action to protect the housing rights of tenants in Canada. "The housing market, left to its own devices, is not delivering what is needed," Sam Watts, chair of the review panel said. "Canadians expect universal access to health care; they should expect access to adequate housing. There is an urgent need to respond to this challenge. The right to housing is a shared responsibility, but one where the Government of Canada must lead the way." The panel consisted of three members of the National Housing Council: Sam Watts chair and CEO of the Welcome Hall Mission; Dr. Ann McAfee from Vancouver who has over 50 years of experience in housing and city planning; and Maya Roy from Toronto who has experience in gender-based analysis, racial equity and human rights.
It wouldn't surprise anyone in Canada that rental housing is a minefield of problems. Whether it's the landlord that renovicts their tenant, the investor group that focuses on short-term rentals or simply the lack of suitable rental stock for all stages of life, the rental situation in Canada is in bad shape. Now a new report from the review panel on the Financialization of Purpose-Built Rental Housing has made its report public and is urging a call to action to protect the housing rights of tenants in Canada. "The housing market, left to its own devices, is not delivering what is needed," Sam Watts, chair of the review panel said. "Canadians expect universal access to health care; they should expect access to adequate housing. There is an urgent need to respond to this challenge. The right to housing is a shared responsibility, but one where the Government of Canada must lead the way." The panel consisted of three members of the National Housing Council: Sam Watts chair and CEO of the Welcome Hall Mission; Dr. Ann McAfee from Vancouver who has over 50 years of experience in housing and city planning; and Maya Roy from Toronto who has experience in gender-based analysis, racial equity and human rights.
New Canadians face unique financial challenges
New Canadians – regardless of their citizenship status – may face unique challenges in comparison to longer-term residents, according to a new survey from the Canadian Credit Union Association (CCUA). "These insights reveal the unique financial challenges faced by new Canadians, highlighting the critical role of tailored financial services that cater specifically to their needs," Jeff Guthrie, CCUA president and CEO, said. These disparities between newer and older residents often come down to financial stability and planning.
New Canadians – regardless of their citizenship status – may face unique challenges in comparison to longer-term residents, according to a new survey from the Canadian Credit Union Association (CCUA). "These insights reveal the unique financial challenges faced by new Canadians, highlighting the critical role of tailored financial services that cater specifically to their needs," Jeff Guthrie, CCUA president and CEO, said. These disparities between newer and older residents often come down to financial stability and planning.
EQ Bank launches new notice savings account
Want the flexibility and liquidity of a high-interest savings account but the high earn rate of a guaranteed investment certificate (GIC)? EQ Bank is banking on it. Earlier this month, the online banking giant launched a new savings account plan they've coined: Notice Savings Account. Like other EQ Bank accounts, if you opt to use a Notice Savings Account, you do not pay monthly fees and not required to maintain a minimum monthly balance. The difference is that you're money will be temporarily 'locked-in' — with customers choosing between 10 and 30-day notice periods in order to withdraw their money. The benefit is that account holders earn 4.0% or 4.25% interest, respectively. "The launch of our EQ Bank Notice Savings Account brings much-needed product innovation to Canadians who deserve the best from their banks," said Mahima Poddar, EQ Bank’s senior vice-president and group head, personal banking. "Notice savings accounts maintain a balance between flexibility and great interest rates, making them a perfect choice for Canadians who are willing to plan their withdrawals in advance to maximize their savings growth. Our no fee, no minimum balance and all-digital account offers all EQ Bank customers access to the same rates so they can save as much or as long as they want." To figure out if these new accounts work for your savings goals, here's a run down of this new EQ Bank product.
Want the flexibility and liquidity of a high-interest savings account but the high earn rate of a guaranteed investment certificate (GIC)? EQ Bank is banking on it. Earlier this month, the online banking giant launched a new savings account plan they've coined: Notice Savings Account. Like other EQ Bank accounts, if you opt to use a Notice Savings Account, you do not pay monthly fees and not required to maintain a minimum monthly balance. The difference is that you're money will be temporarily 'locked-in' — with customers choosing between 10 and 30-day notice periods in order to withdraw their money. The benefit is that account holders earn 4.0% or 4.25% interest, respectively. "The launch of our EQ Bank Notice Savings Account brings much-needed product innovation to Canadians who deserve the best from their banks," said Mahima Poddar, EQ Bank’s senior vice-president and group head, personal banking. "Notice savings accounts maintain a balance between flexibility and great interest rates, making them a perfect choice for Canadians who are willing to plan their withdrawals in advance to maximize their savings growth. Our no fee, no minimum balance and all-digital account offers all EQ Bank customers access to the same rates so they can save as much or as long as they want." To figure out if these new accounts work for your savings goals, here's a run down of this new EQ Bank product.
Prime rate in Canada
Canada’s prime rate — the interest rate that major banks charge their best customers — will drop to 6.45% prompted by the Bank of Canada's third, consecutive rate drop of its overnight rate by another 25 basis points (the equivalent of 0.25%). In July, when the Bank of Canada (BoC) announced the second rate drop of its overnight rate, BoC Governor, Tiff Macklem highlighted the growing confidence that inflationary pressures were now under control. “We are increasingly confident that the ingredients to bring inflation back to target are in place," explained Macklem in the July 24, 2024 policy announcement. The September 4 announcement means the current bank-to-bank lending rate is now 4.25%. This reduction will eventually prompt a reduction in the prime rate lenders use to establish borrowing costs on mortgages, auto loans and other debt products.
Canada’s prime rate — the interest rate that major banks charge their best customers — will drop to 6.45% prompted by the Bank of Canada's third, consecutive rate drop of its overnight rate by another 25 basis points (the equivalent of 0.25%). In July, when the Bank of Canada (BoC) announced the second rate drop of its overnight rate, BoC Governor, Tiff Macklem highlighted the growing confidence that inflationary pressures were now under control. “We are increasingly confident that the ingredients to bring inflation back to target are in place," explained Macklem in the July 24, 2024 policy announcement. The September 4 announcement means the current bank-to-bank lending rate is now 4.25%. This reduction will eventually prompt a reduction in the prime rate lenders use to establish borrowing costs on mortgages, auto loans and other debt products.
Rate drop winners and losers
The Bank of Canada lowered its target interest rate for a third time in 2024, when it announced it would drop the overnight target rate by 0.25%. The BoC overnight rate influences prime rate — the base interest rate lenders use to establish borrowing costs. The rate drop announcement on September 4, 2024, by Bank Governor Tiff Macklem, was the third consecutive rate drop by the Bank of Canada in 2024. During the July announcement, Macklem addressed the growing confidence by BoC analysts in slowing inflationary pressures. “If inflation continues to ease broadly in line with our forecast, it is reasonable to expect further cuts in our policy interest rate,” Macklem said. “The timing will depend on how we see these opposing forces place out.” What does this rate increase mean for the average Canadians? How will those with mortgages, debt, savings and investments be impacted? According to Tyler Thielmann, President and CEO of Spring Financial the winners in this situation "are the people who have variable rate debt who should see an immediate change in their interest costs and more money in their pocket each month." However, for Thielmann, deciphering who the losers are is not as easy as it seems. "Losers is a bit harder to answer; we’ll need to see how things shake out. Typically, lowering interest rates is meant to spur on the economy and encourage growth. If the economy is in fact struggling, that could have a negative impact on many Canadians. Time will tell." When asked about why the Bank of Canada is decreasing the rate, Thielmann speculated that it was to prevent an economic collapse due to forthcoming mortgage renewals.
The Bank of Canada lowered its target interest rate for a third time in 2024, when it announced it would drop the overnight target rate by 0.25%. The BoC overnight rate influences prime rate — the base interest rate lenders use to establish borrowing costs. The rate drop announcement on September 4, 2024, by Bank Governor Tiff Macklem, was the third consecutive rate drop by the Bank of Canada in 2024. During the July announcement, Macklem addressed the growing confidence by BoC analysts in slowing inflationary pressures. “If inflation continues to ease broadly in line with our forecast, it is reasonable to expect further cuts in our policy interest rate,” Macklem said. “The timing will depend on how we see these opposing forces place out.” What does this rate increase mean for the average Canadians? How will those with mortgages, debt, savings and investments be impacted? According to Tyler Thielmann, President and CEO of Spring Financial the winners in this situation "are the people who have variable rate debt who should see an immediate change in their interest costs and more money in their pocket each month." However, for Thielmann, deciphering who the losers are is not as easy as it seems. "Losers is a bit harder to answer; we’ll need to see how things shake out. Typically, lowering interest rates is meant to spur on the economy and encourage growth. If the economy is in fact struggling, that could have a negative impact on many Canadians. Time will tell." When asked about why the Bank of Canada is decreasing the rate, Thielmann speculated that it was to prevent an economic collapse due to forthcoming mortgage renewals.
What is the Bank of Canada interest rate?
As of September 4, 2024, the Bank of Canada interest rate is 4.25%. This is the third, consecutive drop in the BoC's overnight rate — the target interest rate that influences prime rate used by lenders when providing mortgages, personal and auto loans as well as student loans and other debt products. According to the BoC announcement calendar, there are only two more opportunities for the central bank to cut, hold or hike rates in 2024. As the nation’s central bank, the Bank of Canada (BoC) is responsible for making sure our dollar maintains its value — and this is done by keeping inflation low and maintaining stable, economic growth. The BoC's decisions affect how we spend money, how and when we save, where we invest and how businesses grow and prosper. When it lowers its target rate, this prompts lenders, such as the Big 6 Banks or fintech firms, to drop their prime rate — the base rate used to calculate how much it will cost to borrow money. Dropping the target rate — also known as the overnight rate — usually means it's easier to borrow money and the loan will cost you less. This encourages more spending. On the flipside, raising the overnight rate often reduces spending from both businesses and consumers. When less money is spent, businesses earn less profit and, in theory, this cools price increases or prompts price reductions. A rise in the overnight rate makes it harder for borrowers to access funds, effectively costing more when they do get a loan. This is all part of the Bank of Canada's monetary policy. Eventually, the rise and fall of interest rates should help consumers, businesses and the economy reach a state of equilibrium — where consumers and businesses are spending at a rate that keeps the economy moving forward while maintaining a lower cost of living.
As of September 4, 2024, the Bank of Canada interest rate is 4.25%. This is the third, consecutive drop in the BoC's overnight rate — the target interest rate that influences prime rate used by lenders when providing mortgages, personal and auto loans as well as student loans and other debt products. According to the BoC announcement calendar, there are only two more opportunities for the central bank to cut, hold or hike rates in 2024. As the nation’s central bank, the Bank of Canada (BoC) is responsible for making sure our dollar maintains its value — and this is done by keeping inflation low and maintaining stable, economic growth. The BoC's decisions affect how we spend money, how and when we save, where we invest and how businesses grow and prosper. When it lowers its target rate, this prompts lenders, such as the Big 6 Banks or fintech firms, to drop their prime rate — the base rate used to calculate how much it will cost to borrow money. Dropping the target rate — also known as the overnight rate — usually means it's easier to borrow money and the loan will cost you less. This encourages more spending. On the flipside, raising the overnight rate often reduces spending from both businesses and consumers. When less money is spent, businesses earn less profit and, in theory, this cools price increases or prompts price reductions. A rise in the overnight rate makes it harder for borrowers to access funds, effectively costing more when they do get a loan. This is all part of the Bank of Canada's monetary policy. Eventually, the rise and fall of interest rates should help consumers, businesses and the economy reach a state of equilibrium — where consumers and businesses are spending at a rate that keeps the economy moving forward while maintaining a lower cost of living.
Government announces new housing tool
The federal government recently announced the launch of the Canada Public Land Bank, which features 56 federal properties that have been identified as being able to support housing, including five new properties that are now intended for leasing and ready for builders to submit their plans. The aim is for the list to grow regularly in the coming months. "Available, accessible and affordable housing options are scarce, and too many people do not have a safe place to call home. We need to do things differently and work in partnership to build more homes, faster,” Jean-Yves Duclos, Canada’s Minister of Public Services and Procurement, said. “We are leading a Team Canada effort to unlock public lands for housing at a pace and scale not seen in generations, thus leveraging these properties to build strong communities and more affordable housing for the benefit of all Canadians." Efforts are also underway for calls for housing proposals in multiple cities.
The federal government recently announced the launch of the Canada Public Land Bank, which features 56 federal properties that have been identified as being able to support housing, including five new properties that are now intended for leasing and ready for builders to submit their plans. The aim is for the list to grow regularly in the coming months. "Available, accessible and affordable housing options are scarce, and too many people do not have a safe place to call home. We need to do things differently and work in partnership to build more homes, faster,” Jean-Yves Duclos, Canada’s Minister of Public Services and Procurement, said. “We are leading a Team Canada effort to unlock public lands for housing at a pace and scale not seen in generations, thus leveraging these properties to build strong communities and more affordable housing for the benefit of all Canadians." Efforts are also underway for calls for housing proposals in multiple cities.
Canadian students need financial help from parents
With the school year kicking into full gear, Canadian students will once again be juggling the conflicting pressures of academic devotion and fiscal prudence. Even though a majority of post-secondary students (53%) claim to have achieved financial independence, a greater proportion (62%) admit they won't be able to make it through the school year without a bailout from family or the "bank of mom and dad," according to a new study from Simplii Financial, conducted by Ipsos. This, despite the fact that around two-thirds (64%) consider themselves to be financially literate. "While Canadian post-secondary students are financially responsible, they're hard on themselves and their peers when it comes to understanding personal finance," says Jimmy Dinh, managing director and head of Simplii Financial. "Many of them also expect to face more financial challenges with today's higher cost of living." At the same time, 60% are less confident in the financial literacy of their peers.
With the school year kicking into full gear, Canadian students will once again be juggling the conflicting pressures of academic devotion and fiscal prudence. Even though a majority of post-secondary students (53%) claim to have achieved financial independence, a greater proportion (62%) admit they won't be able to make it through the school year without a bailout from family or the "bank of mom and dad," according to a new study from Simplii Financial, conducted by Ipsos. This, despite the fact that around two-thirds (64%) consider themselves to be financially literate. "While Canadian post-secondary students are financially responsible, they're hard on themselves and their peers when it comes to understanding personal finance," says Jimmy Dinh, managing director and head of Simplii Financial. "Many of them also expect to face more financial challenges with today's higher cost of living." At the same time, 60% are less confident in the financial literacy of their peers.
What happens when the boomers leave the workforce?
Baby boomers started to reach the age 65 in 2011. Their retirements have exerted downward pressure on the labour force participation rate ever since, reaching the lowest level in 20 years in 2023, at 65%. A new study from Statistics Canada looks at the potential impact up until 2041. “Despite the large number of baby boomers retiring, the labour force should continue to grow over the next two decades in Canada, partly because of migratory increase. A rise in the labour force participation rate, particularly among older workers, could also have a significant impact on the size of the labour force in the coming years,” the study says. The study uses six scenarios: The "reference scenario" assumes a set inflow of 500,000 permanent immigrants per year over the projection period and a constant proportion of non-permanent residents (NPRs) amounting to 5% of the total population as of 2028. It also assumes that the participation rate of workers aged 55 years and older will be higher in 2041 than in 2023. The five other scenarios alter either the permanent immigration level or the labour force participation rate by age group.
Baby boomers started to reach the age 65 in 2011. Their retirements have exerted downward pressure on the labour force participation rate ever since, reaching the lowest level in 20 years in 2023, at 65%. A new study from Statistics Canada looks at the potential impact up until 2041. “Despite the large number of baby boomers retiring, the labour force should continue to grow over the next two decades in Canada, partly because of migratory increase. A rise in the labour force participation rate, particularly among older workers, could also have a significant impact on the size of the labour force in the coming years,” the study says. The study uses six scenarios: The "reference scenario" assumes a set inflow of 500,000 permanent immigrants per year over the projection period and a constant proportion of non-permanent residents (NPRs) amounting to 5% of the total population as of 2028. It also assumes that the participation rate of workers aged 55 years and older will be higher in 2041 than in 2023. The five other scenarios alter either the permanent immigration level or the labour force participation rate by age group.
Detached home prices increases in 2024
The RE/MAX Hot Pocket Communities Report surveyed 83 markets in the Greater Toronto and Vancouver areas and BC's Fraser Valley area and found that close to 40% of markets reported an increase in detached housing values in the first half of 2024. Another 30% reported an upswing in the number of sales. "While affordability remains the top obstacle for first-time homebuyers, more experienced buyers and investors are taking advantage of softer housing values, making their moves ahead of the Bank of Canada's (BoC) end to quantitative tightening," RE/MAX President, Christopher Alexander, said. "Pent-up demand continues to build, with an estimated 20,000 to 25,000 buyers currently lying in wait in the GTA, and another 5,000 buyers in the Greater Vancouver area ready to pull the trigger. The first interest rate cut in June did little to incentivize buyers, but early indications show the second may have struck a nerve." The Greater Toronto Area's 416 area code led the other regions in rebounding sales momentum, with just over 34% of neighbourhoods stable or experiencing growth in detached home-buying activity — ahead of the 905, Greater Vancouver and Fraser Valley.
The RE/MAX Hot Pocket Communities Report surveyed 83 markets in the Greater Toronto and Vancouver areas and BC's Fraser Valley area and found that close to 40% of markets reported an increase in detached housing values in the first half of 2024. Another 30% reported an upswing in the number of sales. "While affordability remains the top obstacle for first-time homebuyers, more experienced buyers and investors are taking advantage of softer housing values, making their moves ahead of the Bank of Canada's (BoC) end to quantitative tightening," RE/MAX President, Christopher Alexander, said. "Pent-up demand continues to build, with an estimated 20,000 to 25,000 buyers currently lying in wait in the GTA, and another 5,000 buyers in the Greater Vancouver area ready to pull the trigger. The first interest rate cut in June did little to incentivize buyers, but early indications show the second may have struck a nerve." The Greater Toronto Area's 416 area code led the other regions in rebounding sales momentum, with just over 34% of neighbourhoods stable or experiencing growth in detached home-buying activity — ahead of the 905, Greater Vancouver and Fraser Valley.
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