With the release of Finance Minister’s new budget, we can safely say now that there are no immediate changes to the mortgage rules, however, as we already knew, interest rates will start to increase as the economy continues to grow. There were few surprises in Jim Flaherty’s budget, with an emphasis on reducing the deficit, which is not a bad thing. We will be saying goodbye to the lowly penny and to retirement at 65.
The Government’s plan to increase the age you can receive retirement benefits is going up to 67 years of age from 65. This is a reflection of the changing demographic and on a personal finance note, it would be a good time to ensure you have a financial strategic plan. Depending on your age, you have some options: either you work for an extra two years; or you save to cover off the amount you would have received in those two years, approximately $6400 each year.
Moving on to the economy in general, the latest headlines tell us that the inflation rate rose up a notch in February due to higher gas and food prices. Core inflation – the underlying pressure on consumer goods, excluding volatile items such as energy and fresh foods – rose two notches to 2.3 per cent, above the Bank of Canada’s 2-per-cent target line. Payroll is only slightly outpacing the inflation rate but employment rates are improving.
The spring housing market is heating up; house prices are balancing out except in sweltering hot cities like Toronto and Vancouver.
And the Bank of Canada may raise the prime lending rate later this year.
What does it all mean? The economy is getting back to normal.
Since the U.S. housing downturn in 2007 most economic news worldwide has been negative, punctuated with terms such as “economic crisis”, ” roller-coaster markets”, “financial panic,” and “heightened level of uncertainty”.
If we take a snapshot of the world today we find that equity markets have calmed down – the stock exchanges are up and down but the volatility has eased.
The talk of a European collapse has muted.
The U.S. economy is improving and the Federal Reserve is much more upbeat with its reports.
In Canada, the economic waters have calmed considerably. We probably won’t see a housing bubble burst; the West is booming again and interest rates are going to rise later this year or in early 2013.
The big news coming out of Ottawa is not about staving off financial ruin but the same old stuff like fighting deficits, battles over health care transfers, trade issues and some controversies like robocalls.
Pretty much back to normal!
If you have any questions at all about mortgage in general or the economy, please contact me.