Home Economics aims to help Canadians navigate their personal finances in the age of social distancing and beyond.
Bank of Canada sees low interest rates until 2023
During its latest policy decision this past week, the Bank of Canada reiterated its commitment to keep interest rates at historical lows over the next few years to support the country’s economic recovery out of the COVID-19 pandemic. By the bank's forecast, rates will likely stay near-zero until 2023. “The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the two per cent inflation target is sustainably achieved,” Bank of Canada Governor Tiff Macklem said Wednesday. Sustained low rates may be good news for those who need it, according to CTV’s Chief Financial Commentator Pattie Lovett-Reid. However, she adds the temptation to borrow more could spell trouble for a nation already hampered by historic levels of household debt.
30% of Canadians fear they won’t ever financially recover from COVID: Poll
About one-third of Canadians polled on behalf of FP Canada feel they won’t ever recover financially from the pandemic. Those in their 40s and 50s may be in the worst financial position, according to the findings, which showed 36 per cent of that age group not believing they will recuperate. Meanwhile, the survey suggests the worst may be yet to come for Canadians between the ages of 18 and 34, over half of which have taken advantage of government programs such as the Canada Emergency Response Benefit (CERB). Half of younger Canadians polled said they’ve already borrowed money to make up for financial shortfalls as aid winds down.
Beware of falling into a fee trap when seeking investment advice
Market volatility and economic uncertainty caused by the COVID-19 pandemic have sent stressed-out investors flocking to advisors. A recent survey commissioned by Manulife Investment Management shows 63 per cent of respondents plan to seek investment advice in 2020 compared with half in 2019, and over half of Canadians want professional advice about retirement planning. While seeking help from a professional is a positive step, personal finance columnist Dale Jackson warns decisions driven by fear can lead investors into fee traps as many popular investment products – such as mutual funds – carry hefty fees that ultimately eat away at potential returns.
Many Canadians have no financial plan for when financial aid ends
Some Canadians who have relied on financial support from the government, or took advantage of deferral programs, are turning to alternative forms of aid as support measures wind down. But two-in-five surveyed by Credit Canada have no plan for when government aid runs out. One-in-10 respondents said they will turn to traditional forms of borrowing such as family loans or credit cards, and only two per cent will seek bankruptcy of credit counselling. The good news: almost half of respondents who were receiving financial assistance say they will no longer need it once aid programs have ended.
"Canadians who plan to stay in their existing home for the long-term might consider a 10-year fixed rate, which is available at around three per cent and would guarantee their mortgage payment for an entire decade" - James Laird, co-founder, ratehub.ca