Here are some of the stories that caught our eye this week:
Breakup of the week: Aeroplan and Air Canada part ways
In June of 2020, Air Canada’s contract with Aimia—Aeroplan’s parent company—ends. Air Canada announced this week that it’ll be introducing its own in-house program.
Nothing will happen to members’ miles now, but what you can buy with those points will change after June 30, 2020. Travellers purchasing flights through Air Canada and its partners (such as Air China, Lufthansa, and United) will earn points with Air Canada’s program. The airline said this week it will continue to let Aeroplan members redeem points for Air Canada flights after June. Aimia’s CEO, however, said that’s not certain.
What about your credit card? Amex’s contract with the Aeroplan program expires in 2018, while the contracts with TD and CIBC expire in 2024. In this essential summary from Ratehub.ca, we’ve noted that TD has said “there will be no changes to the TD Aeroplan credit card program for its customers at this time.”
Here’s a solid Q&A from MoneySense about the changes.
Toronto, the luxurious
Christie’s International Real Estate released its fifth annual luxury real estate report this week in which Toronto and Victoria were tops in the luxury residential real estate markets, worldwide.
Hong Kong was tops when it came to the World’s luxury index (overtaking London because of Brexit-related issues), but Toronto was the hottest performing property market based on pace of growth because sales of homes costing more than $1 million doubled over a one-year period.
Luxury varies from market to market, but in Toronto it’s defined as properties sold over US$3 million or more—the worldwide average is $2.1 million.
According to its press release, Christie’s said: “Overall, the international luxury real estate market softened in 2016…but markets such as Toronto and Victoria defied the trend, in part fueled by foreign, and in particular Chinese, buyers. Global uncertainty was named as a primary cause for some traditionally strong luxury markets to decline or stall.”
Debt puts a dent in Canadian banks’ rating
Canada’s biggest banks took a bit of a hit this week, with Moody’s downgrading their debt ratings, citing concerns about exposure to increasingly indebted consumers and high home prices.
Moody’s VP David Beattie said this “reflects our ongoing concerns that expanding levels of private-sector debt could weaken asset quality in the future.”
Moody’s reminds us that Canada’s debt-to-income ratio is at 167% and “elevated housing prices leaves consumers, and Canadian banks, more vulnerable to downside risks facing the Canadian economy than in the past.”
This is the second time in five years our banks have been downgraded BUT our banks remain some of the highest ranked by Moody’s. And Scotia Economics mentioned in that CBC article that this downgrade plays into market sentiment, but doubts it will have any impact on the banks’ business.