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Canada’s new construction housing market could be hit a wall, thanks to higher interest rates: TD

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There was a slight increase in Canadian housing starts in November, the second month of strong activity for the homebuilding sector. But according to economists, the solid performance could hit a wall in 2019.

“On a trend basis, housing starts appear to have troughed, with some upward momentum of late,” writes Fotios Raptis, a senior economist with TD, in his most recent note.

Housing starts reflect the number of new homes that have started construction during a given month. They’re an important indicator of both the health of the new homebuilding market, and a way to track the growth of new housing supply in the Canadian housing market.

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While housing starts won’t decline in the new year, there’s a good chance that they’ll begin to plateau, writes Raptis. The reason? A series of policy measures introduced in 2018 that could prove to be major headwinds to the homebuilding sector.

“Going forward, higher interest rates and affordability constraints in major [markets] (GTA, Greater Vancouver Area) could act to hold the pace of new residential construction,” he writes.

There’s been a good deal of talk about what higher interest rates will mean for the Canadian housing market in the new year. The Bank of Canada hiked the overnight rate to 1.75 percent in October, and has indicated its intention to do so again in 2019. The higher rate environment could pose a challenge to new home builders, limiting the number of starts next quarter.

Royce Mendes, a senior economist with CIBC, has also written about the potential impact of higher rates on the sector.

“Following a strong 2017, homebuilders are feeling the pinch of higher interest rates and tighter lending standards,” he writes, in his most recent note.

But both economists are quick to note that new construction starts will only plateau in the new year, and a serious dip in new construction homes is unlikely.

“A steep downturn in homebuilding nationwide appears unlikely,” writes Raptis. “Canada’s population is on the rise, medium-term income growth should remain healthy, and most markets are generally not overbuilt.”

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New home? Prepare for the unexpected

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(NC) Buying a house, getting married or having your first baby are all major life events that are likely to affect your finances. But whether you’re in the midst of a major life event or not, it’s important to check in on your finances regularly to maintain good financial health.

Your financial health encompasses things like your spending, savings, borrowing and future financial plans. It also means dedicating a set amount of savings for unexpected future events. It can even include optional credit protection insurance, such as TD protection plans, to help cover your debt balances in case of death, a covered critical illness or total disability.

Even though it can be tough to think about the unexpected, life is unpredictable and it’s important to plan for the unexpected. Find more information at td.com.

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Mortgage pitfalls to avoid

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(NC) Throughout life, you may have moments where you’ll make a large purchase or invest in a costly item, like your family home. But whether you’re in the market for your first new property or already have a mortgage, leaving this asset unprotected can be costly.   

Insuring your housing financial debt, as well as debt for other big-ticket items like a new boat for your lakefront cottage or keepsake jewelry like an engagement ring, is a smart investment in your well-being.

To help protect your debt balances like a mortgage, your bank may have optional credit protection insurance products.

“Your home is one of your biggest assets, yet illness can happen at any stage of life. Worrying about your mortgage when the focus should be on health isn’t a situation anyone would wish for,” explains Shirley Malloy, vice president at TD. “Fortunately, we offer mortgage protection to provide coverage for your outstanding balance should you face a covered critical health event.”

Mortgage protection can be purchased whether you’re in the process of applying for a mortgage or already have a home financing solution. But what about protection options for credit card debt?

“Given the unprecedented circumstances of this year, many Canadians are trying to plan for the unexpected to protect themselves and their finances,” says Malloy. “TD balance protection plus is an optional product designed to help you deal with your credit card payment obligations in the event of a covered event, such as loss of employment.”

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Is your internet too slow? It’s probably not you

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(NC) We all know the aggravation of a school lesson that just won’t stop freezing or the family video call that looks more like a photo montage. And, as we adjust to the impact of COVID-19 on our day-to-day, that slow connection can have frustrating consequences.

Working from home and learning remotely, both need fast, stable internet, something not enough Canadians have yet. Even if you have fast devices in your home, if the infrastructure in your area is not optimal, your connection won’t be either.

Right now, cities have the infrastructure needed to ensure access. But rural and remote communities are hugely underserved, with fewer than half having high-speed internet, and fewer than a third of households on reservations have high-speed connections.

Fortunately, change is coming. The Universal Broadband Fund is backing projects across Canada right now to ensure the reliable, high-speed internet connections families need to work, study, access services online, and safely stay in touch with each other.

The fund existed before COVID, but as a response to the pandemic, its timetable has been moved up by four years to a target of 98 per cent of Canadians with high-speed internet access by 2026. With the faster pace, at least 90 per cent of us should be connected by the end of 2021.

The fund is focused on improvements in rural and remote communities across Canada to fix the disconnect between internet access for urban and rural households.  This means more remote work opportunities, better access to remote learning and safer access to healthcare, no matter where you live.

It’s not just for good connections at home, either. The improvements mean much better access to mobile networks on highways between remote communities. The result is better, safer navigation and access to emergency services for your family, even on the road in the middle of nowhere. Mobile projects will be focused on serving Indigenous communities and the roads leading to them.

The shape these improvements will take in your area will depend on where you live. Canada is huge, and its communities are hugely diverse, with diverse needs. Keep an eye out for local projects — they’re a small part of something much bigger.

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