Posts Tagged ‘rate increases’

Speaking of Money… It’s Financial Planning Week

October 21st, 2011 No comments

Speaking of Money… It’s Financial Planning Week

October 17-23 is Canada’s third annual Financial Planning Week and as part of its campaign to get more Canadians engaged in their financial wellbeing, Financial Planning Standards Council (FPSC®) hit the streets to hear what Canadians are saying about money.

“Every day is financial planning day at Financial Planning Standards Council and for the 18,000+ Certified Financial Planner® professionals in Canada. But, while many Canadians may have great intentions, they fall into the procrastination trap,” says Tamara Smith, V.P. Marketing & Consumer Affairs, FPSC. “We are putting a call out to every Canadian: this Financial Planning Week, it’s time to take action — even if in small steps — to do more towards your financial wellbeing.”


Even small steps can build momentum and make a difference.


1. Reflect on your life goals (Own a home? Travel the world? Or simply get by?). Think in terms of shorter and longer-term goals. As well, consider your needs and wants. Financial planning supports your life and it involves much more than just planning for tomorrow. It’s about the continuum of your life, which includes today!


2. Talk to your life partner. Money often comes last on the list of relationship conversations but it should be a priority and is an essential part of family life planning. Plan now to prevent money from becoming a stressor on your relationship!

3. Talk to your kids. It’s never too early to teach your kids the value of money and the importance of good financial habits.

4. Talk to a financial planning professional who can help you make sense of it all. CFP® professionals are uniquely trained to help you translate your life goals into meaningful financial strategies and in seeing how all these strategies are connected. Before engaging anyone, learn what to look for and what to ask a prospective planner. See 10 Questions to Ask for starters.


5. Learn something new. You can start by going to a Financial Planning Week event.

6. Track your spending so you know where that darn money is going. You’d be surprised of how much you can squeeze out in savings when you are accountable for every dollar spent.

7. Create a monthly budget.

8. Pay yourself first and start a savings and/or investment program. Even small amounts add up if you save regularly.

9. Pay off debt — especially credit card debt that can result in high interest fees for late payments. Keep your credit rating healthy and don’t forget to pay those bills on time!

10. Get help creating a financial plan that looks at the whole picture. CFP professionals say it’s never too early to start, nor do you have to be wealthy to have a plan. Planning is for everyone!

11. BONUS TIP: Brainstorm a few of your own ideas of what you can do to celebrate Financial Planning Week and make them meaningful for you. Remember – it’s about your life.


•FPSC executives are available for media interviews; also, CFP professionals from various regions across Canada are available to discuss financial planning topics.
•Looking for statistics on Canadians’ emotional and financial wellbeing? Read the highlights on FPSC’s Value of Financial Planning Study.

About Financial Planning Week

Now in its third year, Financial Planning Standards Council (FPSC) and the Institut québécois de planification financière (IQPF) have jointly declared October 17-23, 2011 as Canada’s Financial Planning Week. During the Week, each organization will be spearheading industry events and public outreach activities in their respective markets. Financial Planning Week is part of an ongoing effort by both organizations to make financial planning more a part of Canadians’ lives. Stay up-to-date at / Twitter @FPWeek, and join us on the LinkedIn and Facebook page for Financial Planning Week.



Trying to Make Sense of Rate Increases!

June 8th, 2009 No comments

Many lenders have raised their interest rates on 5 year and longer fixed rate mortgages.

Why is this happening?

Banks lend more money than they take in through deposits.  In order to meet the demand for customer loans, they borrow money in financial markets. To ensure they are not taking interest rate risk, they lock in the rate on the money they borrow to match the term of the mortgage. For example, a 5 year fixed mortgage is funded by a 5 year fixed rate bond. In May, the rate on longer term bonds started to rise, meaning the banks cost of funds – the cost to the bank of raising the money needed to loan to customers — went up. When they pay a higher rate to borrow in the bond market this reduces their profit margins. This is why rates on the longer term fixed rate mortgages have increased. The relationship between bonds and mortgage rates is not new. Attached is a chart that shows how bonds track closely with mortgage rates. They tend to go up and down together.The good news is that the upward trend in bonds prices is a positive sign that consumer and investor confidence is on the mend.

What does this mean for you? 

For those of you who are in a variable rate and want to switch to a fixed rate, the general rule is as follows: The variable rate mortgage is usually a 5 year term, if you want to switch into a fixed rate in year two of your mortgage term you may switch into a 3 year term (the remaining term of your mortgage) 

Million Dollar Question, should I switch into a fixed rate now? 

This week in the Bank of Canada’s announcement they maintained their overnight target rate at ¼ per cent (prime remains the same at 2.25%) and they reiterated their conditional commitment to hold the current rate until middle of next year – on condition that inflation did not rise above their inflation target. What we are hearing is that the prime overdraft rate should stay the same until next year, what we are seeing is that the longer term fixed interest rates are increasing.  You should be asking yourself; at what point if any do you want to lock into a fixed rate.  Fixed rates are at all time low, we are told this is the bottom – do you want to lock in now loose your good rate or hold on for awhile – at what point will you be ready to switch if at all? 

Tough decision!