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Following RBC, other Canadian banks are cutting mortgage rates. Could this boost the Toronto market again?

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Photo: marc falardeau/Flickr

More Canadian banks are trimming mortgage rates following RBC’s move last week to hack 15 basis points off its five-year fixed rate.

It was likely welcome news for homebuyers in Toronto, one of Canada’s priciest markets with an average home price of $750,180, according to the local real estate board.

But could these discounted rates add some fuel to activity in the market?

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“Is this drop of 15 basis points… going to make a difference and jump-start the market once again? No, it’s definitely not,” says Shawn Zigelstein, a GTA-based real estate agent with Royal LePage Your Community Realty.

Such a decline would only save a borrower $40 a month on a $500,000 mortgage, Zigelstein estimates, while around “a couple thousand” would be shaved off the qualifying rate. “If you’re dropping 15 basis points at the end of the day, really you can afford four extra Starbucks at the end of the month,” says Zigelstein.

However, if the recent cuts are the sign of a future trend, the impact could be meaningful.

“If we start to see another potential drop, and then another potential drop could that then make things a little bit more attractive for the buyers out there that have been sitting on the sidelines recently? The answer probably is yes if you start to see a pattern,” Zigelstein adds.

Zigelstein’s remarks echo an earlier report from Capital Economics. After the initial RBC cut, Capital Economics said rates would “need to fall much further” to help Toronto homebuyers.

In terms of improving Toronto ownership housing affordability, Zigelstein says that removing, or tweaking, mortgage stress testing would be more effective.

Federally regulated financial institutions are required to test mortgage applicants’ finances to see if they could afford monthly mortgage payments that match either the Bank of Canada’s five-year benchmark rate (considerably higher than current mortgages) or are 2 percentage points above the rate they are applying for — whichever of the two is greater.

“I’d love to see that stress test disappear or be adjusted in some way or another,” Zigelstein.

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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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