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‘More choice’ for home buyers
Higher interest rates cooled down Canada’s housing market and led to a decline in sales in August, new figures from the national real estate association showed this week.
That slowdown, alongside growth in new listings, gave buyers “more time” and “more choice,” said Larry Cerqua, chair of the Canadian Real Estate Association.
“With sales slowing and new listings returning to more normal levels, demand and supply are continuing to come into better balance,” he said in a statement.
Home values are continuing to rise, but according to CREA’s Home Price Index, the pace of gains is slowing month to month.
CREA said higher interest rates are helping to assuage buyer demand and put a lid on price growth.
Read more to find out where prices are holding strong in Canada.
In the market for a new iPhone?
It was a busy week for Apple users, with a fresh slate of products unveiled from the Cupertino, Calif.-based tech giant.
Tuesday’s Apple Event debuted a new version of the Apple Watch and the iPhone 15, complete with a new USB-C charging port. Apple kept prices steady for the next-gen iPhones amid signs of a slumping global smartphone market.
Tech analyst Carmi Levy told Global News this week that this year’s Apple releases mark “more evolution, not revolution,” but for those shopping for a new phone in the coming months, he said picking up the latest model could make sense.
For anyone eyeing an older model iPhone 12, be aware that Canada is undertaking a new review of the device after a ban was imposed this week in France.
Regulators in France found radiofrequency levels emitted from the iPhone 12 exceeded that country’s limits and banned the sale of the devices. Apple said it would push a software update to address the issue.
A spokesperson for Innovation, Science and Economic Development Canada told Global News this week that it’s taking “additional measures to reaffirm the compliance” of the iPhone 12 after a review in February found the smartphone complied with Canadian standards.
Read more on Canada’s steps to “reaffirm” the iPhone 12’s radiation compliance.
How higher interest rates are affecting credit
Canadians are curtailing the pace of borrowing and bringing in higher earnings to offset the pain of interest rate hikes, Statistics Canada said this week.
The agency says there was $1.81 in credit market debt for every dollar of household disposable income in the second quarter, down from $1.84 in the first three months of 2023.
A jump in disposable income helped to lower these debt-servicing metrics in Q2, as did a drop in new borrowing tied to reduced demand for mortgages, StatCan said.
But some economists warned these positive trends aren’t likely to last as wage gains cool but higher interest rates from the Bank of Canada continue to make debt more expensive.
“The Bank of Canada will need to maintain a close watch on household credit performance as higher interest rates continue to weigh on Canadian households this year,” TD Bank economist Maria Solovieva said this week.
Read more on higher interest rates’ effects on borrowing.
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– THE QUESTION –
“I’m just starting a master’s program in Ontario and have taken out a $20K student loan to help cover the tuition costs. I do plan to work part-time. Should I start paying down my loan while still in school where I can, or should I wait until I’m no longer a student and employed full-time? I don’t have any other major debt like credit card debt or a car payment.”
— A Money123 reader
“Congratulations on following your dream! And big kudos to you to be free of consumer debt!
I really believe the best focus, now that you have taken the loan, is to make sure you don’t accumulate any other debt while you are studying. Your part-time job should help you cover everyday expenses. If you have extra money, it’s a question of enhancing your lifestyle or saving for the future. There is nothing wrong with a little self-indulgence, but mindfulness will be important if you don’t want to find yourself compromised by debt.
If you are leaning towards saving as opposed to indulging, paying down debt is one way of “saving,” but it means you have lost the cash in the event that circumstances change. Rather than making payments on the loan – remember, it is not attracting any interest while you stay enrolled – I’d suggest you set up an account to sock away money that might be needed in an emergency. If you never need it while you are in school, then the money will be there to pay off or pay down the debt once the interest clock starts ticking. Repayment of the loan starts six months after leaving school, regardless of whether you are employed, so this account could cover requirements while you search for work.
A TFSA might be an unnecessary complication, so I’d not do this right now. A simple high daily interest savings account will do the trick. If you are sitting on some of the loan money until the next tuition instalment is required, this is a great place to put it “out of sight, out of mind.” The savings account can be linked to your chequing account for ease of moving money when needed and it can be set up to receive regular amounts once your part-time income is established.”
— Lenore Davis, financial mentor
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