Category: Economic

Canadians owe more than ever before on their mortgages, but fewer and fewer borrowers are falling behind on their payments.

That’s one of the major takeaways from a report published Tuesday from credit monitoring firm TransUnion, which looked at every active credit file across the country to gauge the financial health of borrowers and consumers.

TransUnion found that as of the end of June, the average Canadian mortgage had $198,781 left on it, a figure that has increased by almost five per cent in the previous 12 months. That’s in part a factor of high housing prices, which have prompted people to borrow more than ever to finance a home.

But it’s not just that people are borrowing more — more people are borrowing, too.

“The total number of active mortgage accounts grew annually to 6.0 million, an increase of 1.2 per cent from last year,” TransUnion said.

While Canadians may be borrowing more to get into the real estate market, thus far they seem to be staying on top of their debts, as delinquency rates dropped to 0.56 per cent for the third quarter in a row. 

Credit agencies consider a debt to be delinquent if the borrower is more than two months behind on payments. A delinquency rate of 0.56 per cent means barely one of every 200 mortgage holders was more than 60 days behind on their mortgage payment as of the end of June.

“Despite increases in mortgage debt, serious delinquency rates remain low with very little volatility observed over the past two years,” Matt Fabian, TransUnion Canada’s director of research and analysis, said in a release. “Consumers have so far been able to manage their mortgage obligations despite the increasing balance levels.”

Overall consumer debt climbing

But mortgages aren’t the only type of debt that’s growing fast. The average Canadian owed $22,154 on top of any mortgage at the end of June, TransUnion said, a figure that has grown by 2.7 per cent in the previous 12 months.

The average credit card balance was at $2,840 at the end of June, and on average, people owed $19,087 against their car, if they owned one. Some 23.7 million Canadians have at least one credit card, and there are 3.3 million auto loans across the country.

The fastest growing type of debt, meanwhile, is installment loans, which are unsecured, high-interest, short-term loans, such as the ones often offered to buy home furnishings and other big ticket items. Among the 6.4 million Canadians who had one as of the end of June, the average balance was $20,466 — up 5.5 per cent in the past year.

The delinquency rate for that type of debt is also the highest at four per cent, TransUnion said.

Source link

An Ontario court has approved the settlement of a $29.5 million class-action lawsuit by investors against alternative mortgage lender Home Capital Group Inc.

The Ontario Securities Commission approved a settlement earlier this month with the Toronto-based company and three former executives who agreed they failed to tell investors quickly and completely about fraudulent activity by some mortgage brokers associated with the lender.

About $11 million of the payments being made to the OSC will go toward the $29.5-million, class-action settlement.

Each settlement had been conditional on approval of the other.

The OSC’s announcement of its allegations in April contributed to a sudden exodus of Home Capital depositors that pushed the Toronto-based company to borrow about $2 billion at staggeringly high interest rates in order to stay in business.

Home Capital shares and prospects have improved since billionaire investor Warren Buffett agreed to support the lender through an equity investment and loans by Berkshire Hathaway, his main company.

Source link

Another divorce in Canada’s loyalty card sector has consumers stuck in the middle asking questions about the future of an industry still bruised by the actions of some of its largest providers.

The Canadian Imperial Bank of Commerce announced last week it is severing ties with Loblaw’s President’s Choice Financial and rolling PC’s two million bank accounts into its Simplii Financial brand starting Nov. 1.

It is the latest split between loyalty programs and the country’s banks, which are increasingly moving towards digital banking, following prior breakups between Shoppers Drug Mart and Royal Bank of Canada and Costco and American Express.

TD took over from CIBC as the primary card for Aeroplan, while Air Canada recently said it plans to move away from Aeroplan to start its own loyalty program after 2020.

Technology and the structure of loyalty programs have dramatically changed since CIBC and Loblaw Cos. Ltd.partnered almost two decades ago, said Jacques Nantel, marketing professor emeritus at the University of Montreal’s HEC business school.

The industry has been going through an upheaval, he said, because of the high cost to retailers of operating a rewards program.

“The payback is not what it used to be.”

CIBC’s experience running the PC Financial online banking operation will allow it to compete with rivals such as Tangerine, while Loblaws will focus on its credit card and PC Plus loyalty program, said Patrick Sojka, a travel rewards expert and founder of RewardsCanada.ca.

“Even though banks are still making tons of money they are trimming the products that aren’t adding enough to the bottom line,” he said.

Some industry observers believe the breakup clears the deck for Loblaw, which purchased Shoppers in 2014, to merge or overhaul the PC Plus and Optimum programs, recognized in surveys as among the most favoured by Canadians.

“What it tells me is get ready for a Loblaw-Optimum merger,” said Ken Wong, marketing professor at Queen’s School of Business.

He said the emergence of data analytics even in the last two years has prompted companies to seek to control their data.

Retailers mine card use data to target members with personalized deals designed to lure them to return and spend more.

Meanwhile, consumers increasingly want programs that allow them to collect and redeem points quicker. That has favoured programs, including those offered by credit cards, that provide cash rewards on purchases instead of points that need to be saved for big redemptions.

Canadians carry on average 12.2 loyalty cards, up 25 per cent in the last four years, according to marketing agency Bond Brand Loyalty. However, they only actively use about seven of them.

Satisfaction is highest for co-branded debit cards like PC Financial, coffee cards, credit cards and programs run at drugstore, grocery and gas retailers, according to the Bond Report. It is lowest at coalition programs like Air Miles.

The ire of members has been stoked after several cards unilaterally made changes. Air Miles owner LoyaltyOne Co. abandoned a plan after customer outrage last December to void unused Air Miles after five years.

In 2013, Aeroplan found itself in the midst of an uproar for attempting to invalidate miles that weren’t used over a seven-year period.

Shoppers Drug Mart this week settled a long-standing class action with a Quebec consumers’ rights group, which filed claim in 2010 after Pharmaprix changed the Optimum points program.

But while consumers have witnessed musical chairs by banks and retailers, they seem to be taking it in stride, said Scott Robinson, vice-president of design and strategy at Bond Brand Loyalty.

“What we know is that Canadians have an insatiable appetite for loyalty.”

Source link

Shares of Transat A.T. surged on Monday to the highest level since early 2015 after the travel company signalled that it is having a significantly more profitable summer season than it had expected.

The Montreal-based company’s shares rose as high as $8.85 on Monday before easing back to $8.70 in intraday trading on the Toronto Stock Exchange, up 74 cents from Friday’s close. The stock hasn’t traded above $8.80 since January 2015.

Transat said its third-quarter results will show “significantly higher” adjusted earnings than during the comparable period last year.

Spokesman Christophe Hennebell said the results forecast two months ago when it issued its previous outlook and second-quarter results did not prove to be accurate.

At the time, Transat estimated overall results for the six months from May through October would be similar to last year. But revenues to July 31 have turned out superior to last year, especially since mid-June.

“The revenues are higher, the costs are slightly lower and the effect is increased by the fuel and currency effects,” he said in an interview.

Source link

Airlines across America were rushing to cash in on the flurry of interest from sky-watchers for a first class seat to Monday’s once in a lifetime solar event.

Southwest Airlines was touting five special flights targeting sky-watchers eager to get an out of this world view of the solar eclipse set to pass over the United States on Monday.

While solar eclipses are not uncommon, Monday’s event is getting a lot of attention because the entire continental U.S. will have a viewing window for the first time in almost a century. 

The best place to catch the totality is a band roughly 100 kilometres wide stretching from Oregon in the northwest through 12 other states and into South Carolina on the Atlantic Coast. While any planes in the air at the right time in that area might have a great view from above the clouds, Southwest has singled out five specific flights that should give passengers the best look at the solar event:

• Flight 1375, departing Seattle-Tacoma at 09:05 a.m. PT bound for St. Louis
• Flight 1368  departing Portland at 09:05 a.m. PT bound for St. Louis
• Flight 1577 departing Denver at 10:20 a.m. MT bound for St. Louis
• Flight 301 departing Denver at 10:20 a.m. MT bound for Nashville
• Flight 1969 departing Denver at 09:50 am.m. MT bound for Atlanta

All five flights will have “commemorative flares,” the airline said, “including special viewing glasses, [and] cosmic cocktails.”

The five flights were sold out, according to the airline’s website.

Alaska Airlines, meanwhile, planned a special charter flight departing from Portland, Oregon at 7:30 in the morning on Monday aimed at giving early birds a sneak peek. The flight headed west over the Pacific Ocean to give passengers a view of the celestial event ahead of anyone else on the U.S. mainland.

We’re getting ready to embark on the first flight to see the solar eclipse. Check out our flight path ??? #TotalityAwesome pic.twitter.com/GIRlWSNyLr

— @AlaskaAir

While the airlines are seeing a financial bump from the flurry of interest in the eclipse, the same can’t be said of every industry. Human resources consultancy Challenger, Gray & Christmas estimated that U.S. employers will lose out on almost $700 million US in productivity on Monday, as employees duck out of work to stare at the skies.

The firm comes up with the figure by estimating that out of 87 million American workers who will be on the clock during the eclipse, each will spend on average about 20 minutes away from work to catch a glimpse of the 2½ minute celestial event. Factoring in the average hourly wage of $23.86 US an hour, the firm calculates roughly $694 million worth of productivity could be lost today.

“That is not to say employers need to board their windows and keep employees locked up in conference room meetings until the eclipse ends,” the consultancy said in a press release. “Since this is happening over the lunch hours, the financial impact is minimal.”

Source link