Making sense of the markets this week: September 24, 2023 + MORE Sep 23rd

Nearly half of non-homeowners in Canada think they’ll never be able to purchase a home, according to new survey results from Mortgage Professionals Canada (MPC).

Fixed mortgage rates could surge higher in the coming week after Government of Canada bond yields—which lead fixed mortgage rates—shot up to a 16-year-high.

As the country re-opens after COVID-related restrictions, Canadians are faced with a worrying financial picture. Many have moved, others are looking to travel, and the cost of living is ballooning with unusual rates of inflation. Meanwhile, the Bank of Canada (BoC) rate hikes designed to curb these forces are adding pressure to those with variable-rate loans and mortgages. Unsurprisingly, many Canadians are using their credit cards to charge their expenses.

How much debt does the average Canadian carry? 

The average credit card balance for Canadians in the first quarter of 2023 was $3,909, according to Transunion. And that is up from average monthly credit card spend of almost $2,447 in the third quarter of 2022, which is above the 17.3% from same time in 2021 and up 21.8% in 2019, according to Equifax. And from another report, Canadian consumer debt has risen to $2.4 trillion, with an average debt load of approximately $21,131—excluding mortgages. And Canadians are using credit cards more, as there was a 9% increase in credit balances in June 2023 compared to the same time last year…

Allan Small, Senior Investment Advisor at the Allan Small Financial Group with iA Private Wealth, shares financial headlines and offers context for Canadian investors.

No surprise: Canada’s inflation rate ticked up in August

Canada’s annual inflation rate jumped to 4% in August, up from 3.3% in July—the highest since April this year, when it hit 4.4%. 

Source: Statistics Canada

This was not a surprise to anyone. Higher oil and shelter prices were behind most of the inflationary pressure. Gasoline prices at the pump were up 0.8% year over year (YOY) in August, compared to a fall of 12.9% in July. This was the first annual increase since January 2023. Rents were also up 6% year- over year in August while mortgage rates surged 30.9% YOY. 

What Canadians may have been surprised to learn is that food prices—a topic that’s received the most media attention—had a smaller increase than in July, so food inflation is slowing. According to Statistics Canada, annual food costs rose 6…

Ask MoneySense
I am a single, 70-year-old with a reasonable mortgage of $115,000. I have no family and no dependants. I find that the life insurance on my mortgage is too expensive. Do I need mortgage life insurance anyway? What for?

—Katerina

What is mortgage life insurance?

I’m glad that you noticed the life insurance you’re paying on your mortgage, Katerina. Many people don’t even know if their mortgage is insured or not in the first place. Click on your mortgage when online banking or check your most recent mortgage statement and you will most likely notice a reference to your mortgage being protected or insured or potentially not protected or not insured.

This insurance coverage is typically a combination of life insurance and disability insurance. In the event of death, the life insurance component of the policy pays off the outstanding mortgage. In the event of disability, the disability insurance component of the policy makes your regular payments.

Banks are prohibited from selling most types of insurance in their branches other than life and disability insurance on credit products…