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Posthaste: Why the new mortgage stress test rules could not have come at a worse time for Canada's frothy housing market – Financial Post



Good Morning!

New mortgage stress test rules set to be rolled out on April 6 could be a boon for would-be home buyers, as it will be more responsive to actual mortgage rates than the current posted rate system, but it “could also be more volatile,” according to the Royal Bank of Canada.

The government is replacing its current method of system based on the large banks’ posted mortgage rates, with one based on the contract rates on all insured mortgages.

Colin Guldimann, an economist at RBC, believes the changes could have a meaningful impact on housing markets across the country.

“For the average household in Toronto with an income around $100,000, this would increase how much they can borrow by about $13,000. Borrowers with higher incomes or larger down payments would see their maximum loan sizes move up somewhat more,” the economist said in a note.

Capital Economics’ senior Canada economist Stephen Brown notes that while the stress test rule would likely mean that Bank of Canada would not change interest rates soon, “the timing could hardly be worse.”

“Reducing the severity of the stress tests is likely to put further upward pressure on house prices, at a time when the sales-to-new listing ratio already points to a surge in house price inflation ahead,” Brown wrote in a note. “The dilemma the Bank currently faces, between the need to support activity on the one hand and the need to limit the build-up of financial risks on the other, will only get worse.”

Here’s what you need to know this morning:

  • Statistics Canada to release its consumer price index for January
  • Bloc Quebecois and New Democratic Party MPs and the Green Party Parliamentary Leader will be joined by environmental and law groups to reveal new information about the rising costs of the Trans Mountain pipeline and call on the government not to borrow any more money for this project
  • Mortgage Professionals of Canada to hold press conference in Ottawa on the state of the mortgage market in Canada and their recommendations to policymakers
  • The Financial Consumer Agency of Canada (FCAC) will release online the results of its review of bank complaint handling procedures and its review of the operations of external complaints bodies in Ottawa
  • Finance Minister Bill Morneau appears before the House of Commons finance committee regarding pre-budget consultations in Ottawa
  • CRTC hearings on mobile wireless services in Gatineau, Que.
  • A detailed route hearing is held for the Trans Mountain pipeline expansion in Edmonton
  • Tourmaline Oil Corp. , Topaz Oil Corp., and CWC Energy Services Corp. to appear in court to face charges after a release in 2018 of poisonous hydrogen sulphide that affected human health in Grand Prairie, Alta.
  • Notable Earnings: Uni-Select Inc., Bausch Health, Osisko Gold Royalties Ltd, Kirkland Lake Gold Ltd., Alamos Gold Inc., Iamgold

The novel coronavirus is spreading. And health officials don’t seem to have a handle on it yet. Read out full coverage here.

— Please send your news, comments and stories to yhussain@postmedia.com. — Yadullah Hussain @Yad_Fpenergy

With files from The Canadian Press, Thomson Reuters and Bloomberg

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Air Canada passenger flying from Montreal to Vancouver tested positive for COVID-19 – CTV News



An Air Canada passenger travelling from Montreal to Vancouver on Valentine’s Day has tested positive for coronavirus.

The airline confirmed that it was advised Saturday by the BC Centre for Disease Control that a passenger tested positive for COVID-19.

“Air Canada is working with public health authorities and has taken all recommended measures,” Air Canada media relations spokesperson Pascale Dery wrote in an email.

Air Canada staff were informed of the incident in a memo sent to staff on Saturday. The memo states the passenger was travelling from Iran to Vancouver via Montreal.

“As per normal procedure, the British Columbia Centre for Disease Control advised us in order to follow the standard contact tracing procedures that are implemented any time a passenger is identified as having tested positive for any infectious disease,” it said. “The same procedures that are followed when we have a passenger diagnosed with much more infectious diseases such as measles or tuberculosis.”

“As per their procedures, BC CDC will contact only the crew serving the relevant section of the aircraft and the passengers travelling in the three rows immediately in front and behind the infected passenger. Although there will be no follow-up with our other crew as per the BC CDC, we’ve elected to advise the entire crew, as well as the pilots of that flight.”

The memo notes that risk of transmission of coronavirus is considered low and crew members from the flight are not required to be quarantined or to stop flying, but are advised to “self-monitor for 14 days beginning on the day of the flight and report any symptoms to their local public health professionals should they develop.”

Crew members can elect to stop flying during the 14 day period should they choose to do so.

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The Lotto Max Jackpot Just Hit $70 Million For The Second Time In History – Narcity



Most of us are out there every day, on our hustle, getting that bread. Of course, we wouldn’t have to be if we won the lottery. With the Lotto Max Jackpot now sitting at $70 million for only the second time ever you might want to buy a ticket. 

The prize amount previously hit the $70 million mark in January. It was claimed by Adlin Lewis, a 49-year-old credit risk manager from Brampton. At the time, it was the largest lottery prize in Canadian history.

Now that amount has been matched again, and is up for grabs in the February 25 draw. With that much money, you could almost buy a house in Vancouver or Toronto (just kidding. Maybe like 20 houses).

To go along with this massive jackpot, there are also 20 Maxmillions prizes of $1 million each for the taking. 

This big number means no one took home the biggest amount of cash in last night’s draw. However, there were some otherwise impressive wins across Ontario.

Four winning tickets worth a million bucks each were sold in Burlington, Niagara Falls, Ottawa, and Toronto.

Two tickets worth slightly less at $500,000 each were picked up by some lucky people in St. Catharines and Haliburton County/Muskoka District.

A couple of second-place tickets, each paying out at the not-insignificant amount of $114,829.50 were sold in Brampton and Newmarket.

Finally, a couple of $100,000 Encore wins were sold both on the OLG website and in Toronto.

If you live in these cities and have bought a Lotto Max ticket recently, make sure to get it checked.

It could be a major winner, and you might be richer than you were yesterday.

Since September 2009, Lotto Max winners have racked up an impressive $5.2 billion worth of prizes, distributed over 68 jackpot and 590 Maxmillions wins.

To get in on the next draw, buy a ticket before 10:30 PM on February 25.

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Retirees: 1 Trick to Max Out Your CPP Pension – The Motley Fool Canada



When it comes to retirement, you want your money to work for you. Canada has a couple of pension schemes that will provide retirees with a monthly payout but that’s barely sufficient to meet overall expenses.

The standard of living and related costs have increased considerably over the last few years, especially in large Canadian cities such as Toronto, Vancouver, Montreal, and Ottawa. The average CPP payout for a new recipient starting pension at the age of 65 is $672.87 in 2020, while the maximum amount is $1,175.83.

If you delay CPP payouts to the age of 70, it will increase by an annual rate of 8.4%, while the average CPP payout for a new 70-year old recipient will be over $950 per month.

But most people would not want to work till the age of 70 and instead enjoy their retirement life without banking on just the CPP and other such benefits.

So, investors with age on their side need to create substantial wealth by investing in blue-chip, dividend-paying stocks. It’s absolutely essential to take a long-term view of stocks because you can’t afford to discount the power of compounding.

Here we look at one such high-quality stock that can be part of your retirement portfolio.

Royal Bank of Canada

Shares of Royal Bank of Canada (TSX:RY)(NYSE:RY) have risen by 620% in the last 20 years. This means that if you’d invested $50,000 in the stock in February 2000, it would now be worth well over $300,000 — and this is excluding the company’s dividend payouts.

If you invest $50,000 in the Royal Bank of Canada right now, it can grow to about $110,000 in the next 20 years considering only its forward dividend yield of 3.9%.

If RBC can mimic its historical stock returns, your investment of $50,000 can grow to about $375,000 (including dividend payouts) in the next 20 years.

RBC is Canada’s largest bank in terms of market cap. It’s valued at $154.54 billion and the stock is trading at a forward price-to-earnings ratio of 11.

Despite its massive size, RBC is expected to increase earnings by 5.1% over the next five years. Analysts also forecast its sales to grow by 2.4% in 2020 and by 4.6% in 2021.

RBC is a domestic giant trading at an attractive valuation and is a solid long-term pick. The company’s dividend payout ratio stands at 46.5%, giving it enough room to increase dividends over the next few years.

However, it’s advisable to have such a huge exposure to a single company. Rather, you can diversify your portfolio by adding stocks with strong fundamentals, robust cash flows and a low beta guaranteed to increase shareholder wealth.

The verdict

Saving for retirement needs to be a top priority for most individuals, especially if you want to have a stress-free life. You can live off the dividends from these stocks after creating a massive wealth pool and look to withdraw your CPP at the age of 70.

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Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

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