Happy Father's Day!
  
Join us in honoring all the incredible dads out there this Father's Day, for their unconditional love, sacrifices, and immeasurable impact. Let's make this day a reminder to express our gratitude and affection for those who have shaped our lives in profound ways.
I'm so lucky to have an amazing Dad, and grandfather to our kids.
This weekend we will be celebrating him, and not to mention his amazing vegetable garden and all the help with my ambitious home renovation projects. I really couldn't do it without him.
My Dad is the best Dad. :)
Happy Father's Day!
Bank of Canada Increases Rates and Threatens More
Well, the Bank of Canada certainly means business. Many people predicted that the Bank would hold interest rates in June and then more seriously consider an interest rate hike in July. Instead, the Bank of Canada announced that they have increased its key interest rate by 0.25%. The prime rate will be increased from 6.70% to 6.95%. Therefore, for those who have a variable rate mortgage, your payments may increase by about $15 per month for every $100,000 loan. This interest rate hike increase seems to be having a similar effect as the full 1% increase from July 2022, which jolted the mindset of the market.
It's my opinion that the Bank saw the rapidly recovering housing market, and decided that they needed to act now to slow the market. The last thing the Bank wants is more confidence in the housing market, which is a pillar of the economy. It sounds backwards to want a slow down in housing, but if we are going to get back down to a more manageable 2% inflation, home prices can not be taking off. Higher home prices means higher upward pressure on wages, which are already steadily increasing 5% year over year.
Global inflation is coming down, reflecting lower energy prices compared to a year ago, but underlying inflation still remains high. The Bank may need to continue to raise interest rates further to get inflation down to the 2% target
In the first quarter of 2023, Canada's economy was stronger than expected, with GDP growth of 3.1%. Spending on interest-sensitive goods increased and housing market activity has also picked up recently. Excess demand in the economy has been more persistent than anticipated, and there is a continued demand for labour due to higher immigration and participation rates.
CPI inflation was up to 4.4% in April, the first increase in 10 months. Prices for goods and services are higher than expected. The Bank expects inflation to ease to around 3% in the summer. However, with core inflation in the 3.5% - 4% range in the past few months and excess demand persisting, there are concerns that CPI inflation could get stuck above above the 2% target.
Based on this, the Governing Council has decided to raise the interest rate. Reducing money supply continues to complement the interest rate, and the dynamics of core inflation and outlook for CPI inflation will continue to be assessed. The Bank remains committed to restoring price stability for Canadians and achieving the 2% inflation target.
The next Bank of Canada announcement will be on July 12, 2023.
If you are feeling the pinch with your mortgage payments, please contact me discuss your options.
12 ways to save money during these tough times
It's crucial to be mindful of your finances and find ways to save money. Here are 12 tips to help you save during these challenging times:
1. Create a budget: Develop a comprehensive budget that outlines your income and expenses. This will help you understand where your money is going and identify areas where you can cut back.
2. Cut unnecessary expenses: Review your expenses and eliminate non-essential items or services. Cancel unused subscriptions, reduce dining out, and prioritize essential purchases.
3. Cook at home: Eating out can be expensive. Instead, prepare meals at home using cost-effective ingredients. Plan your meals in advance, make a shopping list, and avoid impulse purchases.
4. Reduce energy consumption: Lower your electricity and heating bills by turning off lights when not in use, using energy-efficient appliances, adjusting your thermostat, and insulating your home.
5. Minimize entertainment expenses: Look for affordable or free entertainment options such as local community events, parks, and libraries. Take advantage of streaming services instead of expensive cable packages.
6. Shop smart: Before making a purchase, compare prices online, use coupons or discount codes, and consider buying used or secondhand items. Delay non-essential purchases to avoid impulsive buying.
7. Save on transportation: If possible, use public transportation, carpool, or walk/bike instead of driving. Maintain your vehicle properly to avoid costly repairs and conserve fuel.
8. Negotiate bills and expenses: Contact your service providers, such as internet, cable, or insurance companies, and negotiate for better rates or discounts. Many companies are willing to work with customers during tough economic times.
9. Reduce debt: Pay off high-interest debt as quickly as possible. Prioritize your payments and consider consolidating or refinancing loans to get better interest rates.
10. Build an emergency fund: Set aside a portion of your income each month into an emergency savings account. Having a financial cushion can help you deal with unexpected expenses without going into debt.
11. Avoid unnecessary credit card debt: Minimize the use of credit cards and pay off the balance in full each month. If you must use credit, do so responsibly and consider low-interest options.
12. Increase your income: Explore ways to boost your income, such as taking up a side gig, freelancing, or monetizing a hobby. Use your skills or talents to generate additional revenue.
Remember, saving money requires discipline and conscious decision-making. By adopting these tips and making small changes to your lifestyle, you can make a significant difference in your financial well-being.
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