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Friday News Round Up: June 9, 2017

Here are some of the stories that caught our eye this week:

Toronto is following in Vancouver’s real estate footsteps

The Toronto Real Estate Board (TREB) released their real estate data for May earlier this week. Key takeaways from the data release include a total average sales drop in the GTA of 20.3%, year over year. Also notable: Toronto house prices rose by nearly 15% last month, compared to May 2016. For more TREB stats check out Zoocasa’s latest blog post.

Canada’s big banks weighed in with an optimistic take on these trends, saying that recent housing policies have “kick-started a soft landing in the GTA housing market” which should be further supported by gradually rising interest rates later this year. Other experts likened Toronto’s housing market to Vancouver’s after the implementation of a provincial foreign buyers’ tax.

Rising interest rates could mean more expensive debt for Canadians

A new report from RBC suggests that a one percentage point increase in interest rates could result in a $130 annual increase in debt servicing costs for Canadians. The report also draws attention to alarming stats around seniors and consumer debt, saying that Canadians 65 and older had an average household debt of over $30,000. The report also notes that one in ten senior households have over $100,000 in debt.

These concerning numbers will likely force a lot of Canadians to rethink their retirement plans – a recent survey by Natixis Global Asset Management says nearly half of Canadians are counting on inheritance as part of their retirement plan, with 77% indicating that family financial resources would be a chief source of retirement funding.

Subprime mortgage seekers are facing higher rates

In the aftermath of Home Capital’s regulatory proceedings, alternative mortgage lenders are facing a high volume of demand from subprime borrowers seeking fitting solutions to finance their homes. In response, lenders are increasing rates and tightening guidelines to stem the flow of applications, and decrease the pressure on their own funds.

Other experts anticipate an increase in activity for Mortgage Investment Corporations as a result of Home Capital’s issues – entities which face scrutiny around their own regulation and stability.

Credit card providers shine after Pemberton Festival mishap

Credit card providers came to the rescue of hundreds of stranded music fans after Pemberton Music Festival – one of Canada’s largest arts and music festivals – was cancelled this month due to bankruptcy.

While purchase-protection insurance on major credit cards often doesn’t extend to music festival tickets, Canada’s big banks TD, RBC and BMO, have decided to issue refunds to ticket holders after acknowledging the “unique circumstances” surrounding the festival’s cancellation. Kudos to these banks for putting customer relationships first!

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