These cars are stolen so often that insurance premiums are climbing

Ben Cousins, BNN Bloomberg

With vehicle thefts on the rise in Canada, owners of the most frequently stolen car models are seeing their insurance premiums go up as well.

Équité Association’s latest Vehicle Theft Trend Report listed the Honda CR-V, the Lexus RX Series and the Ford F-150 as the most stolen vehicles in Canada.

Those three vehicles are stolen so often that RATESDOTCA’s auto insurance quoter shows their insurance premiums have climbed. 

For example, a 35-year-old male CR-V driver in Toronto would have seen the comprehensive portion of his insurance climb by 26 per cent in the last year, according to a recent report from RATESDOTCA. In some cases, the surcharge could be as much as $500. 

The report found that thieves stole 4,117 CR-Vs in the last year. 

Équité Association’s report found Ontario and Quebec saw a nearly 50-per-cent climb in vehicle thefts year-over-year, while Atlantic Canada saw a 34.5-per-cent climb and Alberta saw an 18.3-per-cent rise. 

The association estimates insurers lost more than $1 billion to stolen vehicles in 2022, marking the first year in which losses eclipsed $1 billion. 

“There is no doubt that vehicle theft has reached a national crisis in this country,” Terri O’Brien, president and CEO of Équité Association wrote in a news release in June. 

“These crimes hurt our communities, and puts Canada in the spotlight internationally as a source country for illegal trade.”

RATESDOTCA said those looking to avoid the surcharge can install an anti-theft device, such as a steering wheel lock, which will often eliminate the charge after providing the insurer with proof of purchase. Alternatively, switching insurers can sometimes help as well, as the list of at-risk vehicles can fluctuate.  

“The list of commonly stolen vehicles may vary slightly from insurer to insurer, so if your vehicle is on one insurer’s list, it might not be on another, and you could potentially save money by changing providers,” Daniel Ivans, a RATESDOTCA expert and licensed insurance broker, said in the news release.

“It's always a good idea to check in with a broker to see what options they have available.” 

Ongoing cost-of-living crisis should trigger

another housing benefit payment: NDP's 

Singh

Mia Rabson, The Canadian Press  

The federal government needs to issue another $500 benefit payment for low-income families struggling to keep a roof over their heads, NDP Leader Jagmeet Singh said Thursday.

Singh was in Sooke, B.C. on a cross-country summer tour where the national housing crisis and ongoing anxiety about the cost of living is taking centre stage. 

In an interview, he said the federal Liberals have done an "abysmal" job dealing with the housing crisis and he intends to make the upcoming fall sitting of Parliament all about getting more housing built.

"They're a failure," he said bluntly of the Liberals.

He said the NDP have a long list of policies they want the government to implement, but chief among them is a second top-up to the Canada Housing Benefit targeting low-income Canadians who spend more than a third of their income on rent. 

The first $500 top-up, which was announced in September 2022 alongside a temporary boost to the GST rebate, was rolled out just before Christmas. It cost the government $475 million.

The one-time housing benefit payment was among the items in the supply-and-confidence agreement reached between the Liberals and NDP in March 2022. The agreement lists policy items the two will collaborate on in exchange for the NDP supporting the Liberals on key votes to prevent the minority government from being defeated.

The agreement says the government should consider a second round of the housing benefit payment if cost-of-living issues continue. 

When asked if he thinks that applies now, Singh said: "Yes, absolutely."

He said he also wants more co-operation between Ottawa, provinces and post-secondary schools to build student housing, as well as a fund to buy-up affordable homes that are at risk of being sold to developers and builders who won't keep them affordable.

Singh said the "housing acquisition fund" would "prevent us from losing the affordable homes that we do have."

"That would prevent a building being bought up by a developer and then the tenants being renovicted," he said. 

"Instead, that building that does have affordable rent could then be kept in the hands of the community with this fund, and that would allow for a community group, a not-for-profit or even the residents to turn it into a co-operative."

The Liberals have said housing is their chief priority right now, as millions of Canadians face rising rents and increased mortgage costs on top of a housing market that has seen house prices soar in the last few years. 

A recent cabinet retreat in Charlottetown was heavily focused on the issue, but the government did not announce any new policies there. 

Many housing experts and economists say the main problem is a basic lack of housing supply. There are not enough houses in almost any category to keep up with demand. 

Singh said he recently spoke to a family in Alberta with two good-paying jobs who were going to lose their home because they could not afford the rising rent. 

He said for the Liberals to leave their cabinet retreat without any solutions on the table is not acceptable.

This report by The Canadian Press was first published Aug. 31, 2023.

Canada likely sitting on the largest housing bubble of all time: Strategist

Iva Poshnjari, BNN Bloomberg

The Canadian housing market is at high risk of unravelling, according to one expert. 
 
The level of debt that Canadians have taken on in comparison to their incomes has put many in a precarious position should mortgage rates continue to rise — which is likely, Phillip Colmar, partner at Global Strategist at MRB Partners, told BNN Bloomberg in an interview on Tuesday. 
 
“Canada is probably sitting on the largest housing bubble of all time,” he warned. 
 
Colmar argued that the inflated home prices in Canada are a result of two decades' worth of easy money supplied by the Bank of Canada’s monetary policy for numerous reasons. At the present moment, he sees risk in mortgage rates climbing as Canadian bond yields are dragged up, particularly at a time when debt-to-income ratios are sky high. 
 
“The worst part for a housing bubble is when you have [a] credit bubble underneath it,” Colmar warned. 
 
“The amount of Canadian leverage into the system versus incomes is pretty astronomical — and we’ve seen debt servicing going up dramatically.”
 
While the Canadian banks are doing their part to stop the housing market from toppling over, Colmar said he believes it inevitably will. 
 
“There is definitely a risk here that if mortgage rates go higher or unemployment were to rise or we hit the next recession, then this thing does end up in a deleveraging cycle,” he said. 

Decades of policy failures spurred

Canada's housing crisis: Former deputy

PM

Daniel Johnson , BNN Bloomberg

Canada’s housing crunch is the result of decades of poor policy stemming from the federal government leaving the issue to the provinces in the 1980s, according to one former deputy prime minister.

Former Deputy Prime Minister Sheila Copps said in an interview with BNN Bloomberg that when Canada Mortgage and Housing Corporation (CMHC) was involved in building housing, there was a significant amount of national investment in housing as well as housing policy and strategy.

“The decision that was made back in 1987 to get out of housing at the federal level has resulted in 30 years of underbuilt housing, and also 30 years of not really analyzing good public policy on housing,” Copps said. “I think that's a big issue.”

POLICY SHIFTS

According to Copps, who served as a Liberal deputy prime minister in the 1990s, housing policy in the 1970s saw the national government more directly involved in building housing, including the development of seniors and Indigenous housing.

This changed in the 1980s when provincial governments took over housing policy, Copps said.

While some provincial governments, like Quebec, decided to allocate funding to social housing, Copps said many others have not. 

“When the provincial governments took over the money (intended for housing), a lot of them didn't actually spend it on housing,” she said.

From that period on, she said the federal government was not involved in housing until 2017 when the Liberal government led by Prime Minister Justin Trudeau decided to “insert itself back into the housing game.” Copps said this move marked the beginning of a collaboration that will take time to address the issues of shortage and affordability currently plaguing Canadian cities.

“Now five years later, we're looking at a problem that has been percolating since we signed off on housing back in 1987,” Copps said.

“Sometimes a national government needs to be at the table to fix problems and leaving it up to 10 provinces and three territories is not always the right way to go.”

ENCOURAGING MIGRATION

In addition to building homes to increase supply, Copps said the federal housing strategy should also entail ways to incentivize migration out of Canada’s most densely populated areas.

“The other thing we need to look at is what the housing prices are in rural and remote communities versus urban areas and how we can encourage people to move around. We learned during the pandemic that everybody doesn't have to live in downtown Toronto,” she said.

“There's lots of opportunities to make people think about migrating elsewhere and getting maybe extra points for a registered homeownership investment plan. These things should be built into the thinking and to have that you really need to have a national government that is not just looking at building housing.” 

Millennials’ debt has 'ballooned': RBC economist

Ben Cousins, BNN Bloomberg

A new report suggests older millennials have seen their liabilities balloon to record levels, which risks bringing spending to a halt.

The report from the Royal Bank of Canada, released last week, found older millennials faced a debt-to-disposable income ratio of 250 per cent in 2019, a rise of 100 percentage points from 1999, despite a decline in their homeownership rate.

“It’s always the case that the youngest generation is the most indebted, but now those levels have absolutely ballooned and going into a situation where we’ve seen interest rates rise so drastically,” Carrie Freestone, an economist with RBC and author of the report, told BNN Bloomberg in a television interview Wednesday.

MORTGAGE RENEWALS LOOMING

The future doesn’t look all that bright either, as people with mortgages up for renewal could face a 25-per-cent climb in monthly payments due to the rise in interest rates. Meanwhile, average hourly incomes have only risen 12 per cent since the pandemic, the report said.

On the opposite end, baby boomers are less likely to feel the pinch from mortgage rates, as many have already paid off their homes. RBC found just 14 per cent of boomer households still have mortgage debt and that debt is significantly less than what the millennials face.

ECONOMIC IMPLICATIONS

The debt millennials face can also hurt the economy, especially in the event of job losses, Freestone adds, as they are the generation that spends the most money.

“If you think about the generation that’s spending the greatest share of their take-home pay on discretionary goods and services, it is those middle-aged cohorts in their 30s and 40s,” she said.

“They spend much more than baby boomers who are maybe retired in their 60s. So if this is a group that’s facing higher interest costs, this is a group we could expect to see their consumption levels decline.”

 

Scotiabank announces senior executive changes including new oversight for Tangerine

The Canadian Press

BANK OF NOVA SCOTIA (BNS:CT)

64.12 0.36 (0.56%)

As of: 08/31/23 8:45:21 pm
REAL-TIME QUOTE. Prices update every five seconds for TSX-listed stocks

Chart Type - 1year

Scotiabank announced a raft of changes in its senior executive ranks, including a new head for the group overseeing its Tangerine online banking business and a new chief human resources officer.

The moves follow the appointment of Scott Thomson, former chief executive of heavy equipment dealer Finning International Inc., as chief executive of the bank in February.

Scotiabank announced it has hired former ING executive Aris Bogdaneris as group head, digital transformation, Tangerine, marketing and analytics.

Bogdaneris will be responsible for overseeing the bank's Tangerine business, which was owned by ING before it was acquired by Scotiabank in 2012, as well as global marketing, customer insights, data and analytics and real estate.

The bank also said Barb Mason, group head and chief human resources officer (CHRO) will retire at the end of 2023. She will be replaced by RBC executive Jenny Poulos who becomes deputy CHRO, effective Oct. 2, and CHRO, effective Dec. 4.

Scotiabank said chief risk officer Phil Thomas has also been promoted to add the title of group head.

This report by The Canadian Press was first published Aug. 31, 2023.

Canada launches challenges to U.S. softwood lumber duties

Laura Dhillon Kane, Bloomberg News

Canada is launching challenges to the latest U.S. duties on softwood lumber, arguing the “unjustified” tariffs are harming a key Canadian sector and driving up housing costs in both countries.

Trade Minister Mary Ng will announce Friday that Canada is taking the fight to the U.S. Court of International Trade as well as a dispute-resolution mechanism under the United States-Mexico-Canada Agreement. 

“For years, the United States has imposed unfair, unjust and illegal duties on Canadian softwood lumber, hurting Canadian industry and creating rising housing costs in both our countries,” she said in a statement provided to Bloomberg on Thursday.

The U.S. Department of Commerce released the results of its fourth administrative review of Canadian softwood lumber exports earlier this sumer, landing on a new combined duty rate of 7.99 per cent, down slightly from 8.59 per cent previously.

American producers argue that the Canadian federal and provincial governments unfairly subsidize the lumber sector. The U.S. Lumber Coalition applauded the Commerce move last month.

In the statement to be released Friday, Ng said she has raised the issue with her U.S. counterpart Katherine Tai at every opportunity.

“Canada continues to remain ready and willing to discuss a negotiated outcome to the dispute that provides the stability and predictability the sector needs to ensure its continued growth and success.  

Canadian lumber producers are benefitting from price rises amid record wildfires: Researcher  5:44

 

B.C. premier calls on Bank of Canada to halt rate hikes

British Columbia Premier David Eby is calling on the Bank of Canada to halt further interest rate hikes, saying people are "hurting," and another rate increase next month might worsen, and not reduce, inflation.

In a letter Thursday to Bank of Canada governor Tiff Macklem, Eby urged him to consider the "human impact" of rate hikes, which the bank has employed as an anti-inflationary measure.

The Bank of Canada, an independent body, is set to make an interest rate decision next Wednesday.

"While the role of the Bank of Canada is to make decisions about monetary policy, my role as premier is to stand up for people in B.C. and ensure their voices are heard as decisions are made that impact them," said Eby's letter.

"People in B.C. are already hurting," he said. "In your role as governor, I urge you to consider the full human impact of rate increases and not further increase rates at this time."

The letter said the Bank of Canada had raised rates 10 times since March last year, with the current lending rate at five per cent, the highest in 22 years.

Eby wrote that a Statistics Canada update last month stated that the largest contributor to inflation in Canada was mortgage rates. 

"A rate increase in September is more likely than not to lead to higher mortgage rates again, directly causing further inflation," he wrote.

Sean Gordon, a Bank of Canada media relations consultant, said in a statement the bank has no comment on Eby's letter "as we are currently in the blackout period ahead of our next interest rate decision."

The Bank of Canada announces its key policy decision, the setting of interest rates, eight times a year.

Members of the bank's Governing Council observe a blackout no-comment period around the time of the decisions, says the bank's website.

Eby also wrote Thursday to Prime Minister Justin Trudeau calling for a targeted approach to fighting inflation, focusing on housing and infrastructure improvements.

The letter to Trudeau said a focus on such key sectors will have long-term anti-inflationary benefits while growing the economy and improving productivity.

"There are other ways for us to achieve cost stability, but they do require diligence and co-ordination," said the premier's letter to Trudeau. "The time is overdue for such an effort," said Eby. "Ahead of September's rate decisions, I suggest a robust and targeted approach focused on the largest contributors to inflation."

Eby's letter to Macklem said "unnecessary" further interest rate increases pose a danger not just to homeowners looking to renew mortgages but to renters, students, seniors, families and small business people looking to pay bills, just as they start to recover from the COVID-19 pandemic.

Wal van Lierop, a Vancouver-based venture capitalist, said further interest rate increases will hit most Canadians and affect future growth and investment plans of businesses and governments.

"These across-the-board interest rate increases are hurting Canadians, and, in particular, the middle class and everyone below that, and it is hurting government in trying to achieve the goals that they have set for things like affordable housing and fighting climate change," he said.

Van Lierop said his company, Chrysalix Venture Capital, invests globally in industrial innovations that tackle climate change and help companies reach carbon-neutral targets.

He said he respects the Bank of Canada's independence but the time has arrived for a more modernized approach to fighting inflation.

"The Bank of Canada has no plan other than trying to achieve a traditional goal of two per cent inflation," said van Lierop. "While that was laudable in the 1980s, I think it is now up to the Bank of Canada to start to innovate and not just use the methods they have used in the past 50 years, basically a sledgehammer of all-across-the-board rate increases."

This report by The Canadian Press was first published Aug. 31, 2023.

Mortgage growth buckles under weight of rate 

hikes in Canada

Stephanie Hughes, Bloomberg News

The aggressive pace of interest-rate hikes is hitting mortgage books at Canada’s biggest banks, leading to slowing loan growth, longer amortization periods and a rise in impairments.

Higher borrowing costs cut into mortgage growth, with would-be homebuyers sitting on the sidelines. At the country’s five largest lenders, including Royal Bank of Canada and Toronto-Dominion Bank, residential loan growth slowed to 4 per cent in the fiscal third quarter, compared with annual growth of 9.8 per cent a year earlier.

Meanwhile, the amount of impaired loans in the five firms’ core Canadian banking businesses almost doubled from a year earlier. Stage 3 loans — an accounting category for loans in default that are less likely to be paid back — ballooned to nearly $1.3 billion (US$960 million) in the three months through July from $717 million a year earlier.

Royal Bank and Toronto-Dominion had the largest Stage 3 totals, at $302 million and $285 million, respectively, reflecting the bigger loan books at the two banking giants. Still, the figures account for a small fraction of the lenders’ overall portfolios.

Bank of Nova Scotia said it’s been deliberately slowing mortgage growth as it shifts use of capital.

 “We’re just being more disciplined with regards to customer selection at time of origination, and this is a good time to drive that standard higher here because it’s a softer, slower housing market,” Dan Rees, Scotiabank’s head of Canadian banking, said on a conference call this week. “We are also being more efficient with regards to our use of capital and using customer deselection at renewal as part of that conversation.”

The strategy has been improving Scotiabank’s net interest margin, or the difference between what a bank earns on loans and what it pays for funding, over the past two quarters, said National Bank of Canada analyst Gabriel Dechaine. Mortgage balances have declined about 2 per cent in its Canadian division since the beginning of the year, he said.

The timing of the pullback is ideal since mortgage spreads have been tight in recent quarters, Dechaine said in a note to clients, and investors may welcome lessened exposure to the residential-loan market as risks rise.

Other banks have taken different approaches to mortgage risks. Some are reaching out to borrowers who’ve hit their trigger rates — the point where they’re paying only interest, and aren’t making progress on their loan’s principal. Banks are proposing solutions such as lump-sum payments, fixed-rate mortgage options or extending the mortgage’s amortization to keep monthly payments from rising too much.

The last option has been popular with Toronto-Dominion and Royal Bank clients, boosting the share of mortgages with amortizations of more than 25 years.

In the third quarter, 43 per cent of Royal Bank’s Canadian residential loans had amortization periods exceeding 25 years, up from 40 per cent a year earlier and 26 per cent in January 2022, before the Bank of Canada began its rate hikes. At Toronto-Dominion, the share of over-25-year amortizations rose to 48 per cent from 35 per cent a year earlier, and at Canadian Imperial Bank of Commerce the portion grew to 47 per cent from 43 per cent.  

Perhaps more concerning for CIBC is the $37 billion of Canadian mortgages on its books that are set to renew in 12 months, $7 billion of which are variable. As borrowing costs rise, variable-rate mortgages are impacted, with the bank offering to extend amortizations to borrowers who need it until renewal, CIBC said in an investor presentation Thursday. Once a mortgage is renewed, it reverts back to its original term schedule, which may require additional payments.

“Proactive outreach included a number of programs and initiatives throughout the year to help our clients through a rising rate environment,” CIBC said in the presentation.

The Bank of Canada began its recent rate-hiking campaign in March 2022, raising its trend-setting policy rate from 0.25 per cent to, most recently, 5 per cent, the highest in 22 years. Canadian lenders raised the prime rates they charge Canadian consumers in tandem, leading to the highest mortgage costs in years.

David Dodge: Canada 'not going back' to pre-pandemic interest rates

AND THE TRUTH SHALL SET YE FREE

Daniel Johnson , BNN Bloomberg

Canada is not likely to return to interest rates between one and two per cent, according to a former Bank of Canada governor who also believes rate cuts will not come until late next year –at the earliest.

David Dodge, a senior advisor at Bennett Jones and former governor of the Bank of Canada, told BNN Bloomberg that Canadians should expect interest rates to “come down a bit” around the end of 2024 or early 2025.

But even when the central bank eventually lowers its benchmark rate from the current five per cent, Dodge said he thinks it will remain above levels seen in previous decades. He predicted rates will hover at around 3.5 per cent.

“We're not going back to the (around) two per cent interest rate at the Bank of Canada that we enjoyed in the 10 years leading up to COVID-19,” he said in a television interview. “And we’re certainly not going back to the one or one and a half per cent that we had as recently as 2021.”

Dodge spoke ahead of a scheduled Sept. 6 interest rate decision from the central bank, and a day before Statistics Canada’s scheduled release of second-quarter gross domestic product figures. With that key economic data still to come, Dodge said the economy appears to be still generating excess demand. 

POST-COVID ECONOMIC REALITY

According to Dodge, some economists and the broader market have an overly optimistic view of where interest rates and the real rate of interest will settle. He said the “basic assumption that a lot of people make is that we’re going back to pre-COVID-19 times,” when the real rate of interest was near zero. 

“That's just wrong,” he said. “It will not be the case again, there are all sorts of factors that are going to push up pressures on inflation going forward, which means the central banks are going to have to be tighter than they were in the pre-COVID-19 period.” 

FEDERAL IMPACTS: DEBT SERVICING COSTS

If interest rates end up staying higher for a longer period of time than some anticipate, Dodge said the federal government will be impacted by higher debt servicing costs.

He said the latest federal budget made the assumption that debt service costs for the government would be roughly nine per cent of revenues – but by his estimation, the figure will be closer to 11 per cent or higher.

“They’re going have to plan a for higher debt service costs than (Finance Minister Chrystia Freeland) planed in her budget,” he said. “That means that there's going to be less room for government to do other things.”