Hello and welcome back to Simple Money Podcast, Canada’s own personal finance podcast that presents personal finance issues in short and informative episodes. I’m your host, Matthew Siwiec, also known as the friendly financial coach. Today we have our first personal finance news update where we look at some upcoming topics that will affect Canadians. We’ll look at the upcoming drop in minimum wage for students in Alberta, rising delinquency rates for seniors, the release date and other information for the new First-Time Homebuyer Incentive program, and falling house prices in some Canadian Provinces.
Leading things off, in just over a week on June 26th 2019, the minimum wage in Alberta for all students under 18 is dropping from 15$ to $13 an hour. Employers can also drop the pay for existing student employees if they choose. The way that this program will operate is different than typical minimum wage legislation. If a youth works during the school year then they will earn $13 for the first 28 hours of work a week and $15 beyond that. However, during holidays, they will always receive $13 an hour.
The explanation given by the government for this policy is that higher wages are affecting small businesses and that it has been harder for students to find employment during their recession. Arguments made on the other side are that employment is based on an employer’s needs for workers and not how much money they have. It’s also argued that students will find it more difficult to save for their educations.
Moving to the other end of the age spectrum, Equifax recently reported that 90-day delinquency rate on debt has increased by 9.4% amongst seniors between 2018 and 2019. This is in comparison the Canada wide average of a 3.5% increase.
Equifax also states that the average debt per person increase by 2.5% to $71,300. Of course, it’s important to note that this includes mortgages which can skew the data
This week, the Canada Mortgage and Housing Corporation, also known as the CMHC also announced more details about the new first-time homebuyers Incentive program. Which now has an official release date of September 2nd, 2019 with first closings on November 1st, 2019. We spoke about this new program in episode 48, but as a recap – this program offers down payment assistance of 5 or 10% up to certain limits. In exchange, the government would own an equivalent portion of the property market value.
Then, when you dispose of this property or after 25 years, you would then be required to repay back the government. Very soon we’ll do another in-depth look at this topic, but the biggest surprise is that you will need to repay back the funds after 25 years if you do not sell the property and the government will be listed as a second charge on the mortgage.
What this means is that you may be obliged to make a very large payment in 25 years and you may be restricted to acquire a line of credit or Home equity line of credit as these will typically be required to be a second charge.
Finally, we are seeing a trend of falling house prices in certain markets in Canada. The majority of these drops are in western Canada where house prices dropping by 8.9% over the past year in the Greater Vancouver region and 4.3% in the Calgary CMA. However, house prices in the majority of the eastern provinces are up – such as Ontario which is up 7.1% and Quebec up by a modest 3.3% over the last year.
That’s it for today. If you’re enjoying the show, you can support the show by rating or sharing the show with anyone that you may think that it will benefit. You can also contact me at email@example.com or find me on Twitter at F_FCOACH Take care and talk to you soon!