Recently, I commented that I don’t think recent rise in consumption in the Canadian economy is sustainable.  Now there is increasing evidence that I amy be right.  While consumer confidence in Canada has bounced back in the last year, CIBC World Markets Inc.’s new Consumer Capability Index finds that weak consumer fundamentals and an interest rate hike will see Canadians start to apply the brakes on spending.

This increase in confidence saw more Canadians at the cash register last quarter, with personal purchases climbing nearly four per cent on an annualized basis.  The CIBC Consumer Capability Index is designed to measure the ability of Canadian consumers to spend as opposed to their willingness to do so.  
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I have always been of the opinion that, in Canada, we do not really have an inflationary problem.  Why?  Because we have consumption that is not sustainable – wages have not been keeping up and will not be for years to come.  Although improving, we still have a relatively high unemployment rate.  And now, as reported this morning in the Globe and Mail, most companies are operating under capacity.  I think what it may mean is the BoC will raise rates in late June or early July, and not sooner.  However, whether the rate will rise by .25% or .50% will depend on what the core inflation rate looks like this spring.  
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I have seen articles referring to the Bank of Canada (BoC) Prime Rate.  But, in fact, the BoC does not have a “Prime” rate. It is one of the most-often-made mistake in the press.  Some of the pundits are really ignorant and misinform the public.

What the BoC has is a trend setting rate.  It is called an over-night rate.  At present, it is set at the all time low of 0.25%.  It is a rate at which the BoC will lend money to the Canadian Chartered Banks if they ever run into cash trouble (heaven forbid).  Chartered banks in Canada can borrow money from the BoC on an over-night basis at that rate.
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Young people who are just starting their careers have a lot to think about in terms of finances, says Irene Vassalo, a financial consultant with Investors Group in Cambridge.

Anyone who is self-employed, or doesn’t get benefits, should be thinking about covering themselves with a benefits plan that includes financial protection if they’re hit with a disease like cancer, a stroke, a heart attack or disability from a car accident.  It may be hard for someone in his or her 20s to imagine being disabled, but it can happen to anyone. “They definitely need to look at protection,” said Vassalo.
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I read an article today again on real estate fraud here in Canada.  Mortgage fraud is only one of the three.  The other two are title fraud and value fraud.  I think it may be time to remind people how important it is to try to protect themselves when it comes to purchasing the biggest investment and taking out at the same time the largest debt in their lives.

What is mortgage fraud?  Simply, the culprit assumes the ID of a property owner and mortgages the property without the owner’s knowledge.  How does this happen?  It naturally involves the owner’s ID being stolen and, sometimes, the collaboration of some other parties.  Unfortunately, the owner will only find out when the mortgage lender calls or starts foreclosure.  
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People seldom consider cash-back mortgages when they purchase a home.  In exchange for a higher rate, lenders will give back a percentage (2 to 7% depending on terms) of the mortgage amount to the borrowers when the deals close.  The borrower can use the money for whatever.  Some banks will not allow this to be used as the down payment, however; others will.  So, a first time home buyer with only 5% down can choose a cash-back mortgage.  As a result, he or she can get the down payment back, well almost!
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