Half of Manitobans Not Saving Their Money

Half of Manitobans Not Saving Their Money
Canadians are not saving enough money and don’t feel optimistic about the future, that’s according to a new study out today. The survey conducted by Royal Bank of Canada says 57 percent of Canadians don’t have savings for a rainy day fund, and those who do, tend to use the funds to pay for every day expenses. “It speaks to the importance of having a plan for a rainy day, for retirement and for some of the unfortunate unforseens in life such as disability.” says financial consultant Leslie Hamilton with Investors Group. The study also found nearly half of people in the prairies aren’t saving for a rainy day fund with 27 per cent saying they dip into their savings for every day spending or emergency. 27 year old Jason Andrews says he’s struggling to save money these days. “It still just seems like you could never really get ahead, it’s tough to save,” said Andrews. Andrews who recently bought Winnipeg Jets season tickets says he now plans on cutting back on expenses he doesn’t really need. “I’d say anything on my car would be too much, buying a TV big screen just anything that I would have to use my credit card,” said Andrews.

Some say inflation is also hurting consumers but the survey also found Manitobans are also optimistic about the future and plan on reducing their debt this year. “Consumers here in Saskatchewan and Manitoba are concentrating on very positive ways to help mange their debts,” said Rob Johnston, regional president for RBC. University of Winnipeg student Brittany Thiessen isn’t hopeful she’ll be able to save until she pays off her debt. “Well a lot of my money goes towards paying tuition and books are also very expensive and then once you pay for that you really don’t’ have much left over,” said Thiessen.

Most British Columbians Put Savings on Hold to Pay Down Expenses
Nearly six in 10 British Columbians – 58 per cent — are not saving for a rainy-day fund, while 32 per cent are using savings for daily expenses or emergencies, according to the October RBC Canadian Consumer Outlook Index released Wednesday. While the B.C. numbers are slightly higher than the national average — 57 per cent and 30 per cent, respectively — British Columbians also intend to take action in managing their finances in the coming year, with 28 per cent planning to reduce debt, 30 per cent planning to spend less, 19 per cent hoping to save or invest more and 24 per cent planning to do all three. The report found that 58 per cent of B.C. consumers have delayed making a major purchase such as a car, household appliances or vacation because of the economy.

Canadian Delusions of Debt

Delusions of Debt Freedom Abound
Canadians have an unrealistic vision of their financial futures. A new CIBC poll conducted by Harris-Decima found most Canadians think they’ll be debt-free in another decade or so when, in fact, that isn’t likely to happen.One key finding is that across all age groups (18 to 64), Canadians, on average, believe they will be debt-free 10 to 15 years from their current age. However, the CIBC report notes that many Canadians still hold debt beyond the average age identified by each age group.For example, Canadians 25 to 34 believe they will be debt-free, on average, by age 44. Yet among today’s 45 to 54-year-olds, only 18 per cent report being debt free, suggesting today’s 25 to 34-year-olds are in for a bit of a rude shock. Overall, the poll found Canadians expect they will be debt-free by age 55, but in fact only 35 per cent of today’s 55 to 64-year-olds have actually reached credit nirvana.

Record Household Debt Could Be Canada's Undoing

Record Household Debt Could Be Canada's Undoing
The very thing that lifted the economy from the depths of the recession — Canadians’ passion for owning a home — could also be its undoing, warns the chief economist for RBC Global Asset Management. Central to Eric Lascelles’ concern is that the availability of cheap credit has driven household debt levels to record highs and soon-to-be-rising interest rates will bear a “palpable” impact on individuals as well as the broader economy.“The very source of Canada’s relative success during the worst of the credit crunch — a banking sector that kept on lending and households that kept on buying — could yet spell its undoing if newly enlarged household debt loads prove too onerous to bear,” Mr. Lascelles says in a report issued Tuesday.

Canada House Prices vs Rent 1980-2010

A Case For Renting

Canada's Income Gap Widens

Canada's Income Gap Widens
The income gap between rich and poor in Canada widened in the period from 1993 to 2009, the Conference Board of Canada reported Wednesday. The richest Canadians increased their share of total national income while the poor and those with middle incomes saw their portions shrink, according to the board's analysis, entitled "How Canada Performs." Incomes of the poor increased marginally in the period, it said, but the gap between rich and poor widened. The average income of the poorest Canadians rose from $12,400 in 1976 to $14,500 in 2009....The average income in 1976 was $51,100. By 2009, it had increased by 17 per cent to $59,700, even after adjusting for inflation.But using the measure of median income, which divides the sample into two equal parts and better reflects how the majority of people are doing, the growth was only 5.5 per cent.

Is Gold Money

TD Warns, House Prices To Fall

Home Prices To Fall, TD Warns
The average price of a resale home in Canada will fall by more than 10 per cent over the next couple of years, an analysis by TD Economics predicted Wednesday. Calling it a "moderate correction," the report's authors also say sales will decline by more than 15 per cent over the same period."A combination of more subdued job and household income growth, rising interest rates, the recent tightening in borrowing rules for insured mortgages and fewer first time home buyers are expected to be the chief culprits behind the slowdown," the report said. TD economists profiled 12 urban markets across the country. They highlighted Vancouver and Toronto — currently the two most expensive housing markets in Canada — as the cities most vulnerable to a larger-than-average decline, "reflecting in part their exposure to the condominium segment, which appears particularly ripe for a correction."

TD Report

Canadian Debt Hits Record High

Canada Household Debt Rises
Canadian household debt hit a fresh high as consumers continued to borrow at a faster rate than their wages grew—heightening a key vulnerability of the country's otherwise healthy-looking economy. Economists, as well as the nation's central bank, have increasingly warned against rising household debt, as Canadians borrow at a healthier clip than even their typically more profligate American neighbors. U.S. borrowers have recently reined in their own debt after a deep recession and housing-market bust there. Canadians, meanwhile, have binged on debt, encouraged by mostly rising home prices, low interest rates and economic-growth prospects that are among the best in the Group of Seven. The quarterly ratio of household credit debt—incorporating mortgages and consumer loans—to disposable income hit 147.3% in the January-to-March period, up from 146.2% in the preceding quarter, according to Statistics Canada data released Monday. That's the highest level since the agency began keeping these figures, dating back to 1990. It is also up sharply from just four years ago, when the figure was 127%.

Canada's Bubble About to Burst
The London-based research firm Capital Economics Ltd. has added a new spark to Canada's housing debate with its assessment that the country's real estate market is a bubble that is about to pop. The boom in Canadian real estate has "resulted in the largest rises in house prices ever seen in Canada," the firm says. "And the trigger of an increase in the Bank of Canada's trendsetting interest rates could result in a 25-per-cent drop in property values," it adds. The organization released the research earlier this year in a report for its subscribers, and it received new currency from Bank of Canada Governor Mark Carney's statement, given earlier this week, warning Canadians that they should expect real estate prices to begin to moderate. However, while Carney did not use the word bubble, Capital markets wasn't shy about doing so.

Household Debt Hits Record $1.5-trillion

Household Debt Hits Record $1.5-trillion
Household debt has hit a troubling $1.5-trillion, sparking new fears that the heavy burden on Canadian consumers could hurt the economy, particularly as fiscal stimulus fades.The figure, from a report Tuesday by the Certified General Accountants Association of Canada, means that if household debt were distributed evenly across all Canadians, a two-child household would owe an estimated $176,461, including mortgage costs...About 27 per cent of working Canadians aren’t saving, while single-parent families, retirees and households with an income of $50,000 and under are in particularly dire straits. Single parents were the only family category listed in the report where debt climbs with age, and one-third of retired households are burdened by an average debt of $60,000. Households with an income of less than $50,000 are “six times more likely to be financially vulnerable in terms of their debt-service ratio,” the study said.

Carney Warns On Housing Markets

Carney Warns On Housing Markets
Mark Carney is issuing a sharp warning that the housing market may be overheating, as his ultra-low interest rates, combined with too much optimism on the part of buyers, fuels prices in the country’s hottest markets. Even as growth in mortgage credit has started to slow and prices are expected to moderate, investment in residential properties nationwide is now near peak levels, Mr. Carney said in a speech to the Vancouver Board of Trade. Without using the word “bubble” to describe a housing market where prices are now 13 per cent above their pre-recession peaks, and without saying the Bank of Canada will take specific measures to tame the sector, Mr. Carney left little doubt that he is concerned.

The risk is that expectations become extrapolative, prompting the classic market emotions of fear and greed – greed among speculators and investors, and fear among households that getting a foot on the property ladder is a now-or-never proposition,” he said. Tellingly, Mr. Carney noted that in Vancouver, the country’s priciest market, as in other “globalized” markets like Sydney and Hong Kong, Asian wealth is coming in as investors diversify and look for hard assets, fuelling valuations that in some cases are “extreme.”...Indeed, while the mortgage market in Canada is more conservative than in the United States, where the subprime lending collapse triggered the 2008 financial crisis and Great Recession, Mr. Carney said real estate loans now make up more than 40 per cent of Canadian banks’ assets, compared with 30 per cent a decade ago, a situation he called “unprecedented exposure.”