Canadian Personal Finance Blog

Canadian Government Leaps into the Mortgage Biz

Jim Flaherty announced on Wednesday that the Federal Government will buy up almost $75Billion worth of mortgages (CMHC insured) to help out the liquidity market. I am assuming these mortgages will not be “high risk” mortgages since we didn’t really have those in Canada, however, if they are insured with the CMHC the mortgage principle was over 75% of the value of the houses, so the mortgages are high(er) risk mortgages. Is this a good investment for the Government? Maybe, I don’t know, but it is worrisome that the Government must use my money to make sure these loans “happen”.

Evidently the Government still thinks they will have a modest surplus this year, even with this spending, we shall see if that is really the case.

Another Down Day on the Markets

Markets and the loonie continue to swoon this week, which is good if you are waiting to buy and bad if you have already bought stocks. Dropping commodity prices is evidently what is killing the Loonie, and with oil dropping like a stone, makes you wonder when the bottom is on that price?

Canadian Dollar’s ups and downs too

Church Bazaar and Uncluttering

T-Rex is like decluttering?

In our continuing attempts to de-clutter our lives we are now attempting to give away many toys our children do not play with by giving them to our Church’s Bazaar (on Saturday, for those in Ottawa). This is a great opportunity to get rid of clutter, as long as you don’t go to the Bazaar and buy new crap to replace the crap you gave away. Hopefully the number of “Groovy Girls” and “Polly Pockets” in our house will drop significantly.

Trying to get rid of crap by selling it yourself can be a money making endeavor, not for me. I tried to sell some crap on E-Bay and found out you are not allowed to sell old copies of Playboy (after 1980), who knew? If you wish to rummage through my garbage, my old collection will be in my recycle box next week. All of this in the name of making more space (or just getting rid of crap).

What does a T-Rex have to do with all of this? It goes with the photo thematic premise this week.

Nortel Announces More Cuts

The 3rd quarter results for Nortel came out a day ago, a new corporate model was announced where three business units will be set up, but1300 more jobs will be cut.

Nortel will also be looking at their Real Estate holdings to see whether there is money in those areas that might help the company survive. A freeze on salaries was announced, as well as a hiring freeze, which seems an obvious move. I have seen a few experts question whether this means a freeze on Executive compensation packages as well? John Chambers has taken a salary of $1 in tough times at Cisco, will Nortel leadership do the same?

Soon to be Extinct?

Is Nortel a Dinosaur?

It does seem to be that maybe the problem with Nortel is not necessarily only it’s business models, but maybe it’s markets are starting to dry up.

Their cash cow for the past few years, the CDMA Wireless business is starting to dry up for revenue, and now with Bell Canada and Telus announcing a shift by announcing an “overlay” GSM/UMTS (HSPA) network (shutting Nortel out of the contract), that may well be another sign of the coming extinction of this former Telecomm giant.

The splitting of the company into three distinct business units allow for quick and easy:

• Sale of the division, if needed to raise cash
• Shut down of the division if the business is unable to compete.

Time will tell if Nortel can turn itself around, I hope it does, because it has some amazing people still working there.

New Housing Price Increase Slows

Across the country new house prices have increased by 2.1% year over year. In Ottawa year over year the new house prices are up 4.3% which is interesting to me, however, Edmonton seems to be having price drops of over 5% year over year as well. Depends on where you live, but buying a new home is still increasing (but slower than before).

Carnivals

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Than the day I bought it about nine years ago, which is not a bad investment. I base this all on the wacky assessment notice that I got from MPAC . I don’t actually believe the evaluation as a real value that I would get if I sold my house (without taking into consideration all of the associated costs with selling a house), however it is an interesting number to start with. 

The actual evaluation will not be implemented right away, it will be gradually raised until 2012 when this value will be in place, which is more interesting, since if the housing market in Ottawa remains robust, my house may be worth even more by then? Maybe not, but it is something else to consider in this wacky equation.

Does this mean I will be paying more property taxes? Given that my evaluation has gone up about 11% from the evaluation I had in 2005, I think my property taxes will not go up that much in reference to this evaluation, however, my guess is other charges from the City of Ottawa will increase my property taxes by a fair amount this coming year. My first property tax bill arrives some time in January.

Percentage of Home Ownership

If I am to assume that this evaluation is relatively close to what the market will pay for my house, it does change how much (as a percentage) of my house that I own. Figuring out how much I still owe on my property, I actually own about 60% of my house currently, which is a reassuring feeling, however, it’s not like I can jettison 40% of the house and thus be out of debt. 

The other problem is, all other houses around me are appreciating in value as well, so the value of my house as an investment is not that great, in that it is unlikely I will move out of it and into a much cheaper house in the near future.

Gas Below 90 cents a Liter

Speaking of wacky, in Ottawa gas dropped below 90 cents a liter for a little while, which is very interesting. The Canadian Dollar has swing like a pendulum, but now with lower gas prices, suddenly traveling becomes much cheaper than it was going to be six months ago. Will gas prices stay down? Don’t know, but it’s nice to see for now, as it makes running my cars (and snow blower) much cheaper right now.

Stocks Still Dropping

The world continues to be jittery about stocks and they continue to drop in value for now. Rate cuts continue in most countries trying to stimulate spending, but a lot of folks are just worried and are going to keep their money in their wallets for now, until they are sure their jobs are safe.

More Job Cuts

Rumor has it that my former employer will soon be adding to the employment pool, by laying off another 18% of their work force (I have heard, this is unsubstantiated rumor), which will make looking for jobs in Ottawa that much harder. Not all the job losses will be in Ottawa, but their continues to be a steady flow out.

BMO analyst did a survey and even with the Canadian dollar hovering around parity with it’s American cousin, prices of things in Canada are still 18% more expensive than they are in the U.S. . Is this surprising, not to me, price gouging has been going on for Canadians for a good long time, and I don’t expect parity in pricing in the next year if the Canadian Dollar stays at parity. When a CD costs $12.99 in Canada and $9.99 in the US (the same one) you can see that the Canadian market is not that important to the manufacturers. Do I sound bitter? You bet.

Tim Horton’s Savings Plan

Now with companies like Kia and Rogers using the “If you didn’t buy coffee you could buy this” in their advertising (please note I mentioned this first in the Tim Horton’s Savings Plan many years ago), maybe Tim Horton’s should start their own bank, like PC Financial. Offer points for frequent users and then they can introduce the save a nickel with every coffee, which would be their customer lock. Each time a customer buys with their Pre-paid card, 5 cents is deposited in a savings account for them (or their RRSP), Scotiabank already offers something like this as do other financial institutions.

Look for the “Bank of the Big Cajun Man” coming soon!

New Housing Price Increases Still Up

As with last month, this month’s year over year increase was lower at 5.2% and the month over month increase was Zero, which is quite interesting too. Have a look in the attached table for where you live and the new house price increase.

New housing prices increased at their slowest pace in more than two and a half years in April, despite strong markets in Saskatchewan, Newfoundland and Labrador and Nova Scotia.