Here are some of the stories that caught our eye this week:
Home Capital Settles, Shares Surge
Home Capital this week reached agreements in its case with the Ontario Securities Commission. Home Capital and three former senior execs will accept responsibility for misleading practices, and will be paying a total of $12-million in penalties, $11-million of which will be used toward paying down the almost $30-million spent to settle the class action suit.
These are conditional settlements that still need approval by the OSC and provincial courts.
According to the Globe and Mail, analysts are calling this a first step toward stability, but say investors will be looking for more evidence of a turnaround.
U.S. Federal Reserve Raises Rates
On Wednesday this week, the Feds down south increased their interest rate by 0.25%. This is the second of three expected rate hikes. Typically, actions of the US Central bank have an impact in Canada – confused about why? CTV explains:
Fixed-rate mortgages, the most common in Canada, are tied to long-term Canadian bond prices, which are in turn tied to U.S. bond prices. Banks sell bonds to raise money to lend to mortgage holders and other borrowers. When the U.S. Federal Reserve raises rates, bond prices typically fall. As bond prices fall, banks tighten their lending, and mortgage rates rise.
The next Bank of Canada announcement is slated for July 12th. Following some comments this week by the senior deputy governor at the BoC, Carolyn Wilkins, about the strengthening Canadian economy, some began speculating that we could see a rate hike by the end of 2017, rather than 2018 as previously assumed.
Using a premium credit card could soon cost you
Canadian merchants may soon introduce surcharges for the use of certain cards. This change comes in the aftermath of a class action lawsuit which alleged that providers, including Visa and Mastercard, forced merchants to accept all their cards, including those which came with a higher fee for merchants. Higher merchant fees are often associated premium credit cards.
Visa and MasterCard have agreed to pay $19.5 million each as a result of the lawsuit, and will also allow Canadian merchants to add surcharge fees on credit card payments. These changes are set to come into effect in 1.5 years, after the settlement is approved by four Canadian provinces.
Millennials make their voice heard on housing
A recent survey issued by the Ontario Real Estate Association (OREA) revealed that 28% of Ontario millennials would rank housing amongst their top five most important political issues, and 60% of first-time homebuyers would support a political party that addressed housing affordability.
OREA’s annual housing summit on Tuesday included panel discussions on Ontario’s housing affordability measures, and the barriers to entering the housing market for prospective first-time buyers. The disconnect between the kind of housing first-time buyers require, and what’s available currently, was cited as one of the biggest barriers. Experts also indicated that boomers are occupying properties that millennials want, and would eventually require to raise families.