It’s not as big a problem as you might think. The key is to try to mimic the pay-yourself-first approach by setting up an automatic contribution to your registered retirement savings plan (RRSP) to coincide with your payday. A good rule of thumb to strive for is 10% of your gross income. Remember, in most cases the employees blessed with a defined-benefit pension are contributing around the same 10% rate (sometimes more) to their pension plan. You need to match those pensioners stride-for-stride.

How much to save when you’re 40 and have no pension

Let’s look at an example of pension-less Johnny, a late starter who prioritized buying a home at age 35 and has not saved a dime for retirement by age 40. Now Johnny is keen to get started and wants to contribute 10% of his $90,000-per-year gross income to invest for retirement.

He does this for 25 years at an annual return of 6% and amasses nearly $500,000 by the time he turns 65.

Keep in mind this doesn’t take any future salary growth into account. For instance, if Johnny’s income increased by 3% annually, and his savings rate continued to be 10% of gross income, the dollar amount of his contributions would climb accordingly each year.

This subtle change boosts Johnny’s RRSP balance to just over $700,000 at age 65.

How government programs can help those without a pension

A $700,000 RRSP—combined with expected benefits from the Canada Pension Plan (CPP) and Old Age Security (OAS)—is enough to maintain the same standard of living in retirement that Johnny enjoyed during his working years.

That’s because when his mortgage is paid off, he’s no longer saving for retirement, and he can expect his tax rate to be much lower in retirement.

CPP and OAS will add nearly $25,000 per year to Johnny’s annual income (in today’s dollars), if he takes his benefits at age 65. Both are guaranteed benefits that are paid for life and indexed to inflation. 

That, combined with the withdrawals from his RRSP and registered retirement income fund (RRIF), allows Johnny to maintain his current lifestyle and enjoy a comfortable retirement.

Even without a pension, Johnny has built a comfortable retirement for himself by simply saving 10% of his income each year and investing prudently inside his RRSP.

Working until 65 ensures he will get a robust retirement pension from the contributory CPP, plus he’s lived in Canada all his life and can expect to receive 100% of his OAS benefits.

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Earn a guaranteed 4.5% in your RRSP when you lock in for 1 year.

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Best TFSAs

Aside from an RRSP, another powerful tax-advantage account is a TFSA. Check out the best TFSAs in Canada.

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Why trust us

MoneySense is an award-winning magazine, helping Canadians navigate money matters since 1999. Our editorial team of trained journalists works closely with leading personal finance experts in Canada. To help you find the best financial products, we compare the offerings from over 12 major institutions, including banks, credit unions and card issuers. Learn more about our advertising and trusted partners.

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Extra credit: more ways to boost your retirement income

Finally, the ace up the sleeve for Johnny’s retirement is his mortgage-free home. It amounts to equity he could tap by downsizing, selling and renting, taking out a line of credit or using a reverse mortgage if he found himself needing cash flow or a lump sum of money in retirement.

But can Johnny do better? You bet—and you can, too.

By taking advantage of a tax-free savings account (TFSA), Johnny can boost his retirement savings and give his future self the option of retiring slightly earlier or enjoying an increased standard of living in retirement.

Here’s how: At age 45, Johnny starts contributing 3% of his salary to his TFSA to invest for retirement. This is in addition to the 10% he’s already contributing to and investing inside his RRSP.

He contributes at this rate for 15 years; at which time his mortgage is fully paid off at age 60. Johnny takes the extra cash flow freed up from his mortgage and puts it all towards his TFSA, boosting his contributions by another $30,000 per year for his final five working years.

By the time Johnny retires at 65, he’s grown that TFSA to a little over $335,000. That, combined with the $708,000 in his RRSP, puts Johnny’s retirement savings at just over $1 million.

A sustainable spending calculation shows that Johnny can increase his retirement spending from $40,000 per year to $45,000 per year, until age 95, without worrying about running out of money or tapping into his home equity.

But Johnny’s not done yet.

His financial planner smartly points out that by delaying CPP and OAS to age 70, Johnny will receive 42% more CPP and 36% more OAS compared to taking those benefits at age 65. This strategy has shown to improve lifetime spending and even reduce lifetime taxes. The trade-off is for Johnny to withdraw more from his RRSP from age 66 to 70 before the benefits fully kick in.

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Earn 3% interest tax fee tax-free interest with flexible withdrawals and zero fees.

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Open a TFSA investment account and trade ETFs and stocks with $0 commission on all transactions.

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The Best RRSPs

Aside from a TFSA, another powerful tax-advantage account is an RRSP. Check out the best RRSPs in Canada.

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Why trust us

MoneySense is an award-winning magazine, helping Canadians navigate money matters since 1999. Our editorial team of trained journalists works closely with leading personal finance experts in Canada. To help you find the best financial products, we compare the offerings from over 12 major institutions, including banks, credit unions and card issuers. Learn more about our advertising and trusted partners.

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When we put this strategy to the test it boosts Johnny’s annual retirement spending to $48,500 per year—a $3,500-per-year increase in income for the next 30 years.

Can you eventually retire with enough money if you’re 40 and have no pension?

Indeed, it’s possible to retire comfortably without a pension—even for a late starter with no retirement savings at age 40.

Consider the upside of not having a pension. You’re not forced to contribute 10% or more of your gross income to a pension plan that you cannot access until retirement. This flexibility lets you control the timing and amount of your savings contributions (a double-edged sword, I know).

In retirement, a pension combined with CPP and OAS might be enough to meet all of your monthly cash-flow needs, but what about one-time lump-sum expenses such as a new vehicle, home renovation or repair, bucket-list travel or a financial gift to your children? Harder to do when you’re cash-flow rich and savings poor.

Take stock of your potential sources of retirement income such as OAS, CPP, RRSP/RRIF, TFSA, real estate and other taxable assets.

Understand your current level of spending. That’s the best predictor of our future spending is—what you’re spending now, and that should be the baseline to aim for when you reach retirement.

Strive to contribute 10% of your income towards retirement and do it in a way that mimics the pension plans that you envy—an automatic contribution that aligns with your payday.

Make sure to increase the dollar amount each time you get a pay raise so that you continue contributing a minimum 10% of gross income.

If you have designs on early retirement, or a more luxurious retirement, you’re going to have to save more. The TFSA is your friend. Investments within your TFSA grow tax-free and can be withdrawn tax-free in retirement or whenever you need a top-up to your spending.

CPP and OAS should make up a significant part of your retirement income. Don’t ignore them—use them to your advantage, preferably by delaying the uptake of your benefits to age 70 to maximize the age-deferral credits.

Finally, if you own your home in retirement without a mortgage, consider the paid-off home equity as a fallback option to tap into for annual cash flow or large lump-sum expenses. This can be achieved with a traditional downsizing, but also by selling and renting, taking out a line of credit or using a reverse mortgage.

More on retirement:

• CPP payment dates this year, and more to know about the Canada Pension Plan
• Planning for retirement with little or no savings to draw on
• What happens when you can’t manage your investments anymore?
• Single, no pension? Here’s how to plan for retirement in Canada

The post 40 and no pension: What do you do? appeared first on MoneySense.

Despite the high profile, there’s not a huge number of reverse mortgage products available in Canada. The two main ones of which I’m aware are Equitable Bank and HomeEquity Bank (a.k.a. CHIP Reverse Mortgage). According to Canada.ca, reverse mortgages typically cost more than conventional mortgages and home equity lines of credit (HELOCs). This is because the borrower is not required to make payments, so the lender must wait years to get its money back—seven to 12 years, on average.

My personal take is that reverse mortgages should be considered only as a last resort for homeowners who really need a bit of tax-advantaged monthly income, who don’t have heirs to whom they can bequeath their estate, and who want to stay in their home as long as possible.

Advice-only financial planner Jason Heath, of Objective Financial Partners Inc., agrees. “I think retirees should generally look to their investments or a home equity line of credit before a reverse mortgage. And then consider downsizing or selling and renting as options as well.”

The problem with a HELOC or a traditional mortgage is a borrower is subject to the same income criteria as any other homeowner. And retirees typically won’t qualify for much.

Who should consider a reverse mortgage in Canada

If you do decide to take out a reverse mortgage, ideally, there are no heirs, or they are so well-heeled they won’t mind if they inherit a bit less: like annuities, reverse mortgages reduce the capital available for your estate. I do have an acquaintance who has no heirs, who bought a Toronto home decades ago and is sitting on a fair bit of home equity. I couldn’t think of a reason to talk him out of it, and he seems to be quite happy in retirement, still in his home and generating enough cash for a modest retired lifestyle. 

Author P.J. Wade is well known for her 1999 book, Have Your Home and Money Too (Horizon Pubs & Distributors, April 1993), which neatly sums up the appeal of reverse mortgages. The quote that sticks out in my mind when I once interviewed her was that reverse mortgages can be “your best friend or your worst enemy… your choice.” 

What is a reverse mortgage?

Matthew Ardrey, senior wealth advisor at Toronto-based TriDelta Financial says “a reverse mortgage simply is leveraging your home after age 55. There are several institutions that will create a loan structure secured against the value of your home, which you can then draw upon periodically or in a lump sum. The maximum limit they will lend is 55% [of the home’s value], though it may be less than that. One of the benefits they state is your income is tax-free! How nice of them to give you income from a tax-free asset on a tax-free basis.”

Doing the math on reverse mortgages

You may infer from his tone that, like myself, Ardrey is not a huge proponent of these structures. He uses an example that is provided on one of the reverse-mortgage provider websites to illustrate possible problems with reverse mortgages. It involves a house worth $600,000 and the home owner draws $150,000 in year one with an interest rate of 6.34%. After only five years the accumulated interest will be $54,939.

“This leaves a total outstanding now of $204,939, with the interest owing being 25% of the balance owing after only five years,” says Ardrey. “As time goes on, this can overtake the entire value of the home. Thankfully, they do note that there is no negative equity, but there is not much left at the end of the day for the home owner or their heirs.” 

Heath points to the fact that reverse mortgage rates tend to be much higher than traditional sources. “A borrower can expect to pay at least a couple percentage points more than mortgages and lines of credit. But if you read the fine print in your home equity line of credit agreement, the lender typically reserves the right to decrease your limit or even call the outstanding balance.”

So, homeowners should not count on their HELOC being available when they need it.

Right now, reverse mortgage variable rates are in the 9.5% range, while 5-year variable mortgage rates are about 6% and 5-year fixed mortgage rates are about 5%. HELOC rates are generally 1% above prime, so they’re currently around 7.95%. “There is definitely a premium paid to take advantage of reverse mortgages,” says Heath.  

Ardrey raises another concern: how retirement living care can be paid for. “Often a home can be sold when a senior moves into retirement living, allowing them to pay for this care. In this example, the ability to use the home for this purpose would be significantly impaired.”

He suggests that instead of using a reverse mortgage that could cripple the financial future, retirees need to look honestly at their situation and the lifestyle they can afford. “Though it may not be preferable to sell their home and live somewhere else, it may also be their financial reality. This speaks to the value of planning ahead to avoid being house-rich and cash-poor.”

What are the alternatives to a reverse mortgage for Canadian retirees?

Allan Small, senior investment advisor with IA Private Wealth Inc., says reverse mortgages “have not played a part in any of the retirement plans and retirement planning that I have done so far in my career. I think the reverse mortgage idea or concept, for whatever reason, has not caught on.” Also, “those individual investors I see usually have money to invest, or they have already invested. Most downsize their residence and take the equity out that way versus pulling money out of the property while still living in it.” 

Finance professor and author Moshe Milevsky told me in an email, that when it comes to reverse mortgages—or any other financial strategy or product in the realm of decumulation—“I always ask this question before giving an opinion: Compared to what?” He worries about the associated interest-rate risk, which is “difficult to control, manage or even comprehend at advanced ages with cognitive decline.”  

What are the alternatives to a reverse mortgage? Is it selling the house and moving to downsize? Or, as Milevsky asks, “Is the alternative reducing your standard of living? Is the alternative taking a loan from a local bookie? It’s the alternative that determines whether the reverse mortgage is a good idea or not,” he says. “Generally, I will not rule them out and I think they will continue to grow in popularity among retiring boomers, but I wouldn’t place them at the very top of the to-do list when you get to your golden years.” 

Read more Retired Money columns:

• Why these authors want you to spend your money and die with $0 saved
• Canadian seniors, watch out for these scams
• How to double your CPP income
• RRSP to RRIF, and LIRA to LIF: How it all gets done

The post Why a reverse mortgage <i>should</i> be a last resort for most Canadian retirees appeared first on MoneySense.

Late last year, changes to Ontario’s real estate legislation, the Trust in Real Estate Services Act (TRESA), came into effect, making open bidding legal in Ontario. (Real estate is generally regulated at a provincial level, so as of now, these changes only apply to Ontario.) It was big news at the time, but has it made a big impact? Here’s what this legislation means for buyers and sellers in the province, and how it could influence the housing market.

What is open bidding in real estate?

Open bidding in real estate is when the details of all registered offers on a property are shared openly between prospective buyers. This means that if four different offers are registered on a house, the four potential buyers can see the specifics of each competitor’s offer, including the purchase price, deposit, closing date and other terms. The name of each person making an offer is withheld, and if the purchase is contingent on the sale of another property, that information is also confidential. 

Unlike a closed bidding process—often referred to as blind bidding—open bidding allows each prospective buyer to know exactly how their offer compares to the competition. It also means that they can adjust their offer based on this information (within a given timeframe). Open bidding eliminates a lot of the guesswork in making an offer on a home, and it’s intended to maximize transparency between buyers and sellers.

What impact has open bidding had on Ontario’s housing market?

In 2022, the federal government announced that it would be implementing a Home Buyers’ Bill of Rights. One of the goals of the bill was to make housing more affordable by putting an end to blind bidding, and it appears to have influenced the changes to the TRESA. However, blind bidding has not been banned in Ontario or anywhere else in Canada at this time. Because this new legislation makes open bidding optional, not mandatory, blind bidding is still commonplace in Ontario.

“Open bidding brings more visibility to the buying process,” says Doug Vukasovic, a realtor in Toronto. That said, he isn’t seeing open bidding being used broadly yet: he’s only represented one buyer in an open bidding process, and so far none of his listing clients have opted to use open bidding. “It’s not something people are gravitating towards.”

Based on what he’s seeing in Toronto, Vukasovic doesn’t think that open bidding will have an impact on real estate prices. Changes in the market will come from interest rates, he says, noting that after a slight cool-down in some regions, the demand for houses should gradually increase as mortgage lending costs continue to ease. In other words, affordability is the bigger factor. “We need lower interest rates for people to be comfortable placing an offer,” he says. 

How can sellers decide if open bidding is right for them?

Once you share the details of your listing with prospective buyers, there’s no going back—but you can change the bidding process from closed to open relatively easily. “At any point during the bidding war process, a seller can change from closed to open bids,” Vukasovic explains. “They just need to give written consent to the agent” and disclose the change to buyers. 

It rarely benefits a seller to start with open bidding, Vukasovic says, but it can be helpful once several bids have been registered on the property. For example, if the top three offers on a million-dollar-plus home are within $20,000 of each other, a seller can open up the bidding process to encourage each of those prospective buyers to put in their best and final offer. In this situation, the buyers benefit from greater price transparency, and the seller wins if one of the bidders decides to increase their offer. 

However, when the top two offers on a property are farther apart—say, by $100,000 or more—it’s unlikely that the seller would want prospective buyers to know that through open bidding, as the higher bidder might pull their offer to avoid overpaying for the property. This scenario is far less common than the one described above. “Someone’s got to stick their neck out a little, but paying hundreds of thousands over [the next best offer] is rare,” Vukasovic says. 

Sellers can utilize open bidding strategically within a real estate transaction, which arguably gives them better use of this particular tool. 

But while it feels like a seller’s world in many ways, buyers are also able to exert a certain level of control, Vukasovic says. You can include language in your offer that renders it null and void if the process is changed from closed to open bidding—that language just has to be written into the contract ahead of time. This means that your offer can’t be used as leverage against other bidders (but it also means your offer could be voided unexpectedly). Ask your realtor for advice that reflects your unique situation, as no two real estate transactions are exactly alike.

What buyers and sellers should keep in mind

Buying or selling a home can be stressful, but there are a number of tools at your disposal. A skilled, knowledgeable realtor with experience in your region should be able to provide guidance around open bidding and other strategies. 

So, has this legislation made a big impact on real estate in Ontario? Not at the moment. More than six months after this legislation took effect, it’s still interest rates that are the largest factor weighing on Ontario’s housing market. 

“Will [open bidding] become mainstream in the future? Perhaps,” Vukasovic says. “But from a home-pricing perspective, we aren’t seeing an impact yet.”

Read more about real estate:

• A parents’ guide to home down payment gifts and loans
• How much income do I need to qualify for a mortgage in Canada?
• Can you use the FHSA and HBP together?
• What happens if you delist your condo?

The post Open bidding in Ontario: Game-changer or business as usual? appeared first on MoneySense.

The value of PC Optimum points

At Loblaw grocery stores and Shoppers Drug Mart, PC Optimum points must be redeemed in 10,000-point increments, and 10,000 points have a value of $10. This means that 1 PC Optimum point is worth 0.1 cents, and 10 points are worth 1 cent. So, you can think of PC Optimum points as having a value of 1% when redeeming at these stores.

The point value varies when redeeming for gas purchases. When you fill up at an Esso station, you can redeem 4,000 PC Optimum points for a discount of 10 cents per litre (up to a maximum of 40 litres). Getting the full 40 litres gives you $4 in savings—a point value of 0.1 cents (or 1%). 

However, you’ll have to redeem 4,000 points to get the discount, even if you purchase under 40 litres of gas, which can lower the redemption value. Purchasing 30 litres of gas, for example, gives you a point value of 0.075 cents (or 0.75%). 

Redeeming for car washes can help stretch your points further. At Esso stations, you can redeem 10,000 points for any free car wash. If you choose a car wash worth more than $10, you push the point value above the usual 1%. Get a $15 car wash and your PC point value jumps to 1.5%. 

Note that while you can earn points at Mobil stations, you can’t redeem points there.

Where to earn PC Optimum points

There’s a huge variety of retailers in the PC Optimum program all across the country. Major partners include: 

• Loblaw-owned grocery stores, including Loblaws, No Frills, Real Canadian Superstore, The Independent Grocer, Zehrs, Fortinos, Extra Foods, Wholesale Club and Dominion 
• Shoppers Drug Mart and Pharmaprix drugstores
• Esso and Mobil gas stations
• Joe Fresh
• The Mobile Shop
• Theodore & Pringle Optical

Finally, you can earn PC Optimum points on any purchase when you use one of four PC Financial Mastercards.

How to earn PC Optimum points 

Think of a basic PC Optimum membership as your entry-level pass to the program. Use the PC Optimum card or app to earn points when you shop at affiliated stores online or in person, and also through personalized offers. Points can be earned at more than 4,500 locations across the Loblaw family of grocery stores, as well as Shoppers Drug Mart (or Pharmaprix in Quebec), and Esso and Mobil gas stations.

There are many ways to earn PC Optimum points. The earn rate depends on where you shop, the promotions happening in stores, the card(s) you hold and the other PC services you use. Points earned through personalized offers and in-store promotions vary. Otherwise, you can earn:

• 15 points on almost every $1 spent at Shoppers Drug Mart and Pharmaprix
• 10 points per litre of gas and per $1 spent on convenience items and car washes at Esso gas stations
• A variable number of points at Mobil gas stations (rates vary by station)

In-store offers

When you’re strolling the aisles at participating stores, keep an eye out for the PC Optimum logo. In-store offers let you earn more on everyday items. For example, Shoppers Drug Mart periodically has a promotion for 20x the points. You can get your coupon by loading the offer in your weekly email or opening your Shoppers or PC Optimum app. Be proactive by checking flyers in advance when you’re writing up your shopping list.

Personalized offers

When you register for personalized offers, you’ll receive offers every Thursday for items you’ve purchased before or are likely to be interested in (based on your transaction history). Examples include bonus points on certain items, extra points with a minimum spend, and bonus points days when you can get discounts while earning extra points. These offers are great, low-effort ways to multiply your earnings.

Other PC services

Give your points balance a serious bump when you sign up for a no-fee PC Financial Mastercard. You’ll earn points on every purchase you make, no matter where you make them. Plus, when you swap out your chequing account for a PC Money Account, you’ll accelerate your earnings everywhere you shop.

Boost your PC Optimum rewards with a PC Financial Mastercard

Bump up your PC Optimum points earn rate and earn rewards everywhere with one of the four PC Financial Mastercards—three of which have no annual fee.

At a glance: The PC Financial Mastercard has no annual fee and no minimum income requirement, making it a totally accessible way to earn PC Optimum rewards no matter where you shop. With accelerated grocery, gas, drugstore and travel bonus categories, you’ll reach your points goals even faster. 

PC Financial Mastercard

VISIT PCFINANCIAL.COM FOR MORE DETAILS

Annual fee: $0

Rewards: 10 – 25 Points per dollar

• 25 points per $1 spent at Shoppers Drug Mart
• At least 30 points per litre at Esso and Mobil gas stations
• 10 points per $1 on everything else

Welcome offer: None

VISIT PCFINANCIAL.COM FOR MORE DETAILS

Card details

Interest rates	21.99% on purchases, 22.97% on cash advances and 22.97% on balance transfers
Income required	None specified
Credit score	560 or higher
Point value	1 PC Optimum point is worth $0.001 (redeem 10,000 points for $10).

At a glance: The PC Financial World Mastercard is available to people who have an annual income of more than $60,000 (or $100,000 for the household). With this card you’ll enjoy boosted earn rates without having to pay any annual fee.

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PC Financial World Mastercard

Visit pcfinancial.com for more details

Annual fee: $0

Rewards: 10 – 35 Points per dollar

• 35 points per $1 spent at Shoppers Drug Mart and Pharmaprix
• 30 points per $1 at Esso and Mobil gas stations
• 20 points per $1 at Loblaw banner stores
• 10 points per $1 on all other purchases

Visit pcfinancial.com for more details

Card details

Interest rates	21.99% on purchases, 22.97% on cash advances, 22.97% on balance transfers
Income required	Personal income of $50,000 or household income of $80,000
Credit score	560 or higher
Point value	1 PC Optimum point is worth $0.001 (redeem 10,000 points for $10).

At a glance: Those who make $80,000 annually (or $150,000 as a household) are eligible for the PC Financial World Elite Mastercard, which offers the best earn rates of any PC Financial credit card, plus World Elite perks. Even better, there’s still no annual fee. 

PC Financial World Elite

VISIT PCFINANCIAL.COM FOR MORE DETAILS

Annual fee: $0

Rewards: 10 – 45 Points per dollar

• 45 PC Optimum points per $1 at Shoppers Drug Mart
• 30 points per $1 at Loblaw banner grocery stores
• 10 points per $1 on everything else

Welcome offer:

VISIT PCFINANCIAL.COM FOR MORE DETAILS

Card details

Interest rates	21.99% on purchases, 22.97% on cash advances (21.97% for residents of Quebec), 22.97% on balance transfers
Income required	Personal income of $80,000 or household income of $150,000
Credit score	560 or higher
Point value	10 PC points = $0.01 at Loblaws grocery network and Shoppers Drug Mart.

At a glance: Shoppers willing to pay a $120 annual fee can take their earnings to the next level while also enjoying some premium perks like a complimentary PC Express Pass.

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PC Insiders World Elite Mastercard

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Annual fee: $120

Rewards: 10 – 70 points per dollar

• Up to 70 points per $1 on gas at at Esso & Mobil
  50 points per $1 spent at Shoppers Drug Mart and Pharmaprix
• 40 points per $1 at Loblaw banner stores
  40 points per $1 on Joe Fresh apparel
• 10 points per $1 on all other purchases

Welcome offer: earn a welcome offer* of 300,000 PC Optimum points with the NEW PC® Insiders World Elite® Mastercard®. Conditions apply. Offer ends December 31st, 2024. 

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Card details

Interest rates	20.99% on purchases, 22.97% on cash advances, % on balance transfers
Income required	Personal income of $80,000 per year or household income of $150,000 per year
Credit score	660 or higher
Point value	1 PC Optimum point is worth $0.001 (redeem 10,000 points for $10).

Boost your rewards with a PC Money Account

What is PC Money? 

Launched in 2020, the PC Money Account is the newest financial offering from President’s Choice, which joins other no-fee online banks to provide a fairly comprehensive suite of free everyday banking services while shaking things up with the perk of earning PC Optimum points. While earning rewards points is a common benefit of using a credit card, it’s less typical when you do everyday banking. 

As far as bank accounts go, the PC Money Account offers a solid portfolio with free unlimited everyday transactions, including cash withdrawals (from PC Financial ATMs or at select points of purchase), bill payments, account-to-account transfers and Interac e-Transfers. As this isn’t a traditional chequing account, paper cheques are not available. However, between point-of-purchase, bill payments and Interac e-Transfers, you can still pay for everything from food to utilities to rent. And, the PC Money Account card is widely accepted. Use it wherever you could use Mastercard—in person, online and internationally. 

How to earn points with PC Money

When you shop with the PC Money bank card, you’ll earn 25 PC Optimum points per dollar on purchases at Shoppers Drug Mart and 10 points per $1 everywhere else (except for banking transactions, like paying bills or e-Transfers). You can link your card to your PC Optimum account to earn even more points through personalized offers. Plus, you can earn up to 200,000 points in bonuses during the process of setting up your account and making your first transactions—a value of $200. 

For those who shop at Loblaw banner stores and affiliates, the PC Money Account is a no-brainer. It offers most, if not all, of the everyday banking services you need, fits seamlessly into the existing PC Optimum program and costs you nothing to use.

What is a PC Express Pass?

In April 2023, PC announced its Express Pass, a grocery delivery service which competes with the likes of InstaCart and UberEats. But it is used at Loblaw banner stores, including Loblaws, Zehrs, Freshmart, Real Canadian Wholesale Club, Real Canadian Superstore, No Frills, and many, many others, wherever PC products are sold. It can also be used for picking up orders, too.

You’re wondering about the cost, right? It’s $9.99 a month, or $99.99 a year (which saves you over $20 if you sign up for the annual membership). It costs the same as the streaming services from Amazon Prime, so make sure you will use PC Express Pass for it to be of value to you. There is a one-month free trial period. Here’s what you would get with PC Express.

• unlimited free pickup and delivery on same-day, next-day or future orders over $35
• unlimited number of delivery addresses (which could be of interest for caregivers of those living independently) 
• online shopping at 800-plus PC stores, including Joe Fresh and Shoppers Drug Mart
• easy cancellation
• ability to earn PC Optimum points and redeem PC Optimum offers

Frequently asked questions

Read more about grocery shopping:

• The best grocery credit cards in Canada
• Will food prices keep going up? Check the weather
• As food costs rise, our grocery shopping habits are changing
• Why you won’t get Air Miles at Metro anymore

The post PC Optimum points: How it works and best ways to earn appeared first on MoneySense.

Mastercard vs. Visa: 4 things to know

1. Visa and Mastercard don’t issue their own credit cards

It might seem counterintuitive, but neither Visa nor Mastercard directly distributes credit cards. Both of these companies are processing networks that partner with card issuers like banks, credit unions and other financial institutions to get their cards to the public. And it’s the actual card issuer, not the processing network, that sets most of the terms regarding interest rates, rewards and annual fees.

2. Visa and Mastercard are processing networks

As processing networks, both Visa and Mastercard handle a lot of the behind-the-scenes work that allows your payments to be processed. In other words, these companies provide the technologies and networks that power your transactions. When you make a payment against your credit card balance, you are not paying either Visa or Mastercard—you’re paying the card issuer.

3. Both are widely accepted

Visa and Mastercard are both widely accepted at Canadian retailers, with a few exceptions. Costco, for example, doesn’t accept Visa in stores (however, you can use Visa at Costco.ca).  

4. Whether a credit card is a Visa or Mastercard really shouldn’t impact your choice

In the vast majority of cases, the processor—Visa or Mastercard—is immaterial to your choice of a credit card. Your best practice is to compare each credit card option on its own merit, paying attention to details on the interest rate, rewards or cash back, welcome bonus and additional perks. From there, you should choose the credit card that best aligns with your particular spending habits and offers benefits you will use. This selection process can be extended to financial institutions as well. The best choice for you may well come from a bank, credit union, or possibly even a retailer, and you should be open to all of these card options even if you don’t hold any other accounts with that lender.

Mastercard vs. Visa: What are the differences?

The differences between Visa and Mastercard are negligible and likely won’t make or break your decision about which card to use. However, there are a few slight distinctions readers should know about.

1. Acceptance

The vast majority of Canadian retailers accept both Visa and Mastercard. That said, Costco accepts Mastercard only for in store credit card payments. If you’re a regular Costco warehouse shopper, you might want to consider carrying a Mastercard.

2. Benefits

While most benefits and perks are set by the card issuer, there are some cases where the processor has an influence. For example, when it comes to airport lounge access, Visa works with the Priority Pass program while Mastercard offers membership in their proprietary Mastercard Airport Experiences. Other areas to investigate include concierge services, and the terms and conditions related to the liability insurance and fraud protection a card provides.

3. Card tiers

You may have seen some Visa cards include “Infinite” or “Infinite Privilege” in their names, and some Mastercards include “World” or “World Elite.” These tiers are meant to communicate that they are premium cards, offering added perks and benefits. They also carry higher income requirements and annual fees.

Visa Infinite cards offer discounts at eligible partner hotels, access to Visa concierge service, up to 12 types of insurance and, sometimes, membership and access to Priority Pass airport lounges. Infinite cards usually have annual fees of around $120 and a minimum personal income requirement of $60,000. Infinite Privilege cards are the most premium in the Visa line, with all of the benefits of the Infinite series plus additional perks for airports, hotels, wine and fine dining. These benefits are reflected in the annual fee—a hefty $399—and in the minimum income requirement of $200,000.

Mastercard’s tiers are called World and World Elite. Mastercard World cards typically carry a modest annual fee of around $99 and have a minimum annual personal income requirement of $60,000. World cards offer extra travel insurance, plus entertainment perks through their Priceless program. In the top tier, Mastercard World Elite cards add to these perks additional insurance coverage, membership to Mastercard Airport Experience Lounges, and Boingo Wi-Fi memberships. World Elite cards tend to charge $120 to $150 in annual fees, and applicants must be able to show $80,000 in annual income.

Explore your options with Visa and Mastercard

When deciding whether to go with a Visa or Mastercard, the bottom line is the things that matter—like sign-up bonuses, rates, benefits and terms—are usually set by the issuing institution, not the processor. Your best bet is to decide which programs or perks will be most valuable and applicable to your spending profile, and seek out the specific card that fits the bill. If you’re set on choosing either a Visa or Mastercard, though, the tools below will help you narrow the field.

Visa credit cards

Compare your Visa options with our interactive tool and filter credit cards based on rewards value, annual fees, income requirements and more.

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Mastercard credit cards

Compare your Mastercard options with our interactive tool and filter credit cards based on rewards value, annual fees, income requirements and more.

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Read more about credit cards:

• The best credit cards in Canada
• The best American Express credit cards in Canada
• 5 credit card habits that earn points faster
• What happens if you get rejected for a credit card?

The post Visa vs. Mastercard: What are the differences—and do they matter? appeared first on MoneySense.

Tuesday’s consumer price index report saysprices for travel tours, passenger vehicles and electricity helped drive the headline figure lower.

Meanwhile, shelter costs are still the main driver of inflation as Canadians face significantly higher rents and mortgage payments.

The federal agency noted, however, that shelter price growth slowed last month to 5.7% year-over-year, down from 6.2% in June.

Inflation has remained below 3% since January and fears of inflation reaccelerating have diminished as the economy has weakened.

“There’s more to go in terms of reaching price stability as Canadians feel the pinch and pull back on spending,” wrote Andrew DiCapua, senior economist at the Canadian Chamber of Commerce.

“But we think the Bank of Canada will continue their path of interest rate cuts and move again in September, prioritizing economic growth as inflation moderates.”

What is the U.S. inflation rate?

In the United States, year-over-year inflation reached its lowest level in more than three years in July, the latest sign that the worst price spike in four decades is fading and setting up the U.S. Federal Reserve for a rate cut in September.

The annual U.S. inflation rate now stands at 2.9%.

Improvement in global supply chains and the effect of high interest rates have helped cool price growth across the Canadian economy.

What’s driving inflation right now?

Grocery prices, which at one point were growing at a double-digit annual rate, are now rising at a much more modest pace. Last month, grocery prices were up 2.1% from a year ago.

Prices for many goods, such as clothing and footwear, have outright fallen compared with a year ago.

And the housing market has remained relatively muted, despite fears earlier this year that interest rate cuts could spur a flurry of activity.

However, some price pressures persist, particularly in services-producing sectors.

Prices for services were up 4.4% from a year ago, a trend that economists say reflects high wage growth.

Will interest rates go down?

Nevertheless, with the backdrop of slowing price growth overall, forecasters are widely expecting the Bank of Canada to continue cutting interest rates at back-to-back meetings.

Governor Tiff Macklem has signalled that the central bank is increasingly concerned about the risk of keeping interest rates too high for too long.

The Bank of Canada has been paying closer attention to the slowdown in the labour market as it adjusts monetary policy. Labour shortages have decreased significantly and the unemployment rate has risen steadily, reaching 6.4% in July.

At the last interest rate announcement, Macklem said the governing council decided to lower its policy rate, in part to help the economy pick up speed again.

Its key interest rate now stands at 4.5%.

The central bank is scheduled to hold its next interest rate announcement on Sept. 4.

In addition to the latest inflation figures, the central bank will have second quarter gross domestic product data to consider at the end of the month. 

While most forecasters expect the central bank to cut its key rate by a quarter-percentage point in September, RBC economist Claire Fan said a weaker-than-expected GDP print could prompt the central bank to cut by a half-percentage point instead.

“Should it be that economic conditions were to deteriorate faster than they were anticipating, I think it’s fully reasonable to think that they could (cut) at a faster pace,” Fan said. 

According to its latest forecasts, the central bank expects the economy grew at an annualized rate of 1.5% between April and June. 

Read more about inflation:

• How the Bank of Canada’s benchmark rate impacts your finances
• Canada’s inflation rate—and what it means for your investments
• Will Canada go into a recession in 2024?

The post Canada’s inflation rate falls to 2.5%, paving way for another interest rate cut appeared first on MoneySense.

The statistics support this and show an increase in down payment help in recent years. A CIBC study from June 2024 found that 31% of first-time home buyers received financial support from family, an increase from 20% in 2015. Financial support currently averages $115,000.

I encourage parents to be careful about gifting too much too early to their children. Being overly generous can discourage your children from making their own way in life.

There’s also a risk that you might need that money someday to fund your retirement, including long-term care costs. Your child could also have a relationship breakdown, which may mean that your gift does not stay in the family.

How to keep the money safe

A gift or inheritance received during a marriage may be exempt from division upon a relationship breakdown. But if the funds are not easy to track or are used to buy a matrimonial home, the assets may end up being split upon a divorce.

When parents advance funds for a child’s home down payment, mortgage lenders often require a letter stating that it’s a gift. Parents also have the option of lending their child money for a down payment; often, families document this with a loan agreement.

Case law has called into question whether a loan agreement is sufficient to protect funds advanced to a child in this way. If a loan does not bear interest and does not have repayment terms, a court may not agree that it’s actually a loan.

It’s probably advisable to register the loan as a second mortgage secured by the home, but this may not be sufficient on its own to support the loan’s legitimacy.  

You should consider establishing a legitimate loan and/or having a child prepare a domestic agreement, also known as a pre-nuptial agreement. Signing a “pre-nup” is easier said than done, though. It can be a contentious process, and forcing your child and their partner to do so can be stressful for all parties involved.

Loan forgiveness is an option

If you loan money to a child, you can forgive the loan during your life or upon your death. Of course, you should only do so if you know you won’t need or want the money back in the future.

If you have loaned different amounts of money to your children, documenting the loans can help ensure an equal division of your estate. Some wills include a so-called “hotchpot” clause that accounts for all loans outstanding, so that one child does not receive a disproportionate gift or forgiven loan, as well as an equal share of the estate.

What are the tax implications of a gift or loan?

There are generally no tax implications to gifting in Canada. This differs from the U.S., which has a gift tax. U.S. citizens in Canada still need to be mindful of these U.S. implications. Only two situations may trigger additional income taxes for the parent: selling an asset at a capital gain or withdrawing an asset from a tax-sheltered account a registered retirement savings plan (RRSP). But gifting itself has no tax issues with adult children.

If a loan to your child was for investment or business purposes, forgiving it can have tax implications. This is in part because loan interest on funds borrowed to buy investments or fund a business is generally tax-deductible for the borrower.

As a result, forgiveness of such a loan may lead to a capital gain for the lender—if it’s forgiven during your life. If the loan is forgiven upon your death, there should generally be no tax implications.

If you loan money to a child to invest and the loan does not bear the Canada Revenue Agency prescribed rate of interest—currently 5%—the income may be attributed back to you and taxable to you. You can give an adult child money to invest and not be subject to attribution. But if you loan it and can call it back without charging the prescribed rate, the CRA will attribute interest, dividends, rental income and business income back to you. Capital gains, however, are taxable to the child.

Before you loan or gift money for a down payment…

When considering a gift or loan, you should first and foremost be sure that you are in a position to help your kids without risking your own financial security.

There may be family law, estate and tax implications to making a loan. Seek legal and tax advice from a qualified professional to protect yourself and your family.

Read more about financial gifts:

• 6 things to consider before borrowing from the Bank of Mom and Dad for your first home
• Financial gifts: What you need to know before giving money or investments
• The tax implications of gifting adult children money and more
• Do you ever have a legal obligation to pay RESP money back to your parents?

The post A parents’ guide to home down payment gifts and loans appeared first on MoneySense.

However, I didn’t listen—primarily because I didn’t want to deal with the perception (one that I previously held myself, to some extent) that if someone is wearing hearing aids, they must be getting old and losing touch with the world. I worried it would change how my friends saw me and affect my future business opportunities. In hindsight, these concerns didn’t mesh with reality. (More on that later.) 

But in November 2022, I got a wake-up call I couldn’t ignore. I was asked to make a presentation at Urban Transitions, a major conference, on the topic of communicating effectively in support of sustainability initiatives. When members of the audience posed follow-up questions using a hand-held microphone, I had difficulty hearing, and I was forced to ask some of them to repeat themselves. That awkward experience made me realize that if I wanted to keep my own business sustainable, I needed to communicate more effectively. 

Yet, I still didn’t rush out to buy hearing aids. I’ve since discovered I’m not alone when it comes to putting off such an important endeavour. According to WebMD, the stigma of wearing hearing aids explains why many of us delay getting them—something I can totally relate to. 

And according to Consumer Reports, other reasons that people delay purchasing hearing aids—on average, for nine years!—include such perceptions as: I don’t need them yet; they won’t help; and they cost too much. It’s true that quality hearing aids are expensive. Let’s look at how much they cost and why, and how you might save money on hearing aids.

How much do hearing aids cost in Canada? 

Hearing aid prices in Canada vary considerably. For instance, one retail source, Hearing Solutions in Ontario, says the cost of hearing aids in that province range from $2,500 to $6,200. Another, Hearing Excellence, says that hearing-aid prices in Ontario range from $1,000 to $8,000, with an average cost of $2,500 to $3,500. 

What you pay will depend on the brand and functionality of the product (having more features typically means a higher cost). Where you buy also matters—prices for the same product can vary among both audiologists and retail outlets, depending on their mark-up. For instance, my audiologist openly admitted that Costco has a reputation for selling hearing aids for less—plus, it offers free hearing tests and other perks (more on that below).

How to find affordable hearing aids in Canada

Price isn’t the only consideration when buying hearing aids, but as with any other major purchase, it can pay to shop around. 

For instance, if you search for “cheap hearing aids in Canada” online, brands like Jabra (available through Costco) and Signia pop up. Costco Canada’s Hearing Aid Centres don’t list their prices online, but on the company’s U.S. site, one model of Jabra (Enhance Pro 20) is listed at USD$1,599.99 per pair; at the current exchange rate, that works out to about CAD$2,200. I called the Costco Hearing Aid Centre in Niagara Falls and learned that you can purchase the same product here for $1,999.99—so in this case, at least, it costs less on our side of the border. 

Note, however, that you must be a member of Costco to buy hearing aids there. Membership starts at $60 (going up to $65 on Sept. 1, 2024), but it might be worth it. In addition to free hearing tests, Costco offers other complimentary hearing-aid services: follow-up appointments, cleanings, insurance for loss or damage, warranties and a six-month trial period. 

Or, as a starting point, you can try an online hearing test through retailers (such as HearCanada) and manufacturers (like Starkey). Just recognize that online hearing tests do have their limitations. As explained by HearCanada about its own free online test, it’s “not a diagnostic hearing evaluation” and “the purpose of the test is to help you determine whether you could benefit from a comprehensive in-clinic test.”

Why is there such a big cost range for hearing aids? 

To answer this, I talked to Danielle Glista, an assistant professor in the School of Communication Sciences and Disorders at Western University, home of the National Centre for Audiology. She explained that several factors impact the price of hearing aids. Many of these have to do with the dramatic evolution of hearing-aid technology. 

“Hearing aids have come a long way. If you go back to the 19th century, people commonly referred to hearing aids as ear trumpets,” says Glista. 

She explains that analog devices were common until the mid-1990s. That’s when digital hearing aids—which convert sound waves into digital signals—started hitting the market, “paving the way for significant technology improvement.” 

Glista has done academic research on advanced digital signal processing, including frequency compression for hearing aids. For certain types of hearing loss, frequency compression “takes high-pitched sounds that individuals can’t hear well and moves them down… to an area where they have better residual hearing and therefore they can hear these sounds,” she explains. 

Other tech features separate entry-level hearing aids from the proverbial Cadillacs. Bluetooth connectivity, which enables users to connect their hearing aids to their phones and other electronic devices such as tablets, computers and even televisions is common. Some manufacturers also offer premium features such as health monitoring, which uses sensors to monitor your heart rate and your activity level, says Glista. 

Then there’s one of the biggest innovations in audio technology: hearing aids that use artificial intelligence (AI). AI can improve hearing-aid performance by automatically adjusting settings for different listening situations and user needs, explains Glista. “Advanced digital signal processing and machine learning algorithms are used together to process and analyze sounds in real-time. This information, combined with the hearing-aid user’s wearing preferences and routines, allows AI in hearing aids to automatically adapt settings to optimize the listening experience.”

Pretty cool, right? But these advanced hearing aids are not cheap. They’re essentially driven by “mini computers,” and there are costs associated with customization, distribution and professional services, says Glista. 

At Hotel Dieu Shaver, the independent Niagara Region clinic where I went, non-AI hearing aids range from $3,551 (Phonak L50-R model) to $5,561 (Phonak L90-R model) after the $1,000 Ontario discount has been applied. In contrast, prices for Starkey AI hearing aids range from around $5,000 for the mid-level model (Genesis AI 16) to $7,000 for the highest tech level (Genesis AI 24), again with the $1,000 Ontario discount applied.  

Yet another high-cost contributor is that, unlike over-the-counter aids that you purchase directly from the manufacturer, today’s digital hearing aids provided through an audiologist are often tweaked through a computer. 

Using hearing-aid fitting software, an audiologist can select, program and fine-tune the hearing aids. “This includes programming related to sound level and frequency-specific adjustments, based on the person’s hearing loss,” says Glista. “Programming customization also includes other measurements such as real-ear measures to capture how large the person’s ear canal is and ensure that the hearing aids deliver the correct amount of amplification at the eardrum.”

When you visit a hearing clinic, ask for a detailed breakdown of costs associated with different treatment options, payment options including insurance and government assistance, and follow-up and support services offered. Some hearing health-care providers bundle follow-up maintenance of the hearing aids into their pricing, says Glista. They may also spend time helping patients to develop a listening strategy they can use at work, at home and while participating in hobbies.  

How much does a hearing test cost?

Before you get a pair of hearing aids, you’ll want to get your hearing tested at a clinic, which is also where you’ll buy and be fitted for your hearing aids. Some hearing clinics offer hearing tests for free, while others charge about $100. 

Do insurance and government benefits cover hearing aids?

Financial support for hearing aids may be available in your province or territory, as part of a broader program for assistive devices and disability supports. For instance, Ontario’s Assistive Devices Program (ADP) pays up to $500 per ear toward the purchase of new hearing aids, for approved applications. (You’ll have to pay for the hearing assessment or find a free one, though—the ADP doesn’t cover that cost.) To qualify, you must be an Ontario resident, have a valid health card, and need the hearing aids for at least six months. Income isn’t a consideration for the ADP.

So, if you’re an Ontario resident and you buy a $5,000 pair of hearing aids, the audiologist will deduct the $1,000 paid for by the ADP, bringing your cost to $4,000. (There’s no sales tax on hearing aids.) If you’re in a 20% marginal income tax bracket, after claiming the balance you paid as a medical expense at tax time, your end cost is reduced to $3,200. Note, however, that for the 2024 tax year, you can only claim eligible medical expenses minus 3% of your net income or $2,759 (whichever is less)—so, some or all of your medical expenses save no tax. (Learn more about claiming medical expenses.)

Also good to know: If you’re a recipient of government disability benefits, such as the Ontario Disability Support Program (ODSP), you might qualify for hearing aid benefits. If you’re a current or former member of the Canadian Armed Forces, you may be eligible for hearing-aid funding through Veteran Affairs Canada (VAC). 

Lastly, if you have workplace health benefits or a private medical insurance plan, check whether hearing aids (along with batteries and accessories) are covered. 

Are hearing aids tax-deductible in Canada? 

Yes, you can claim hearing aids (and their batteries) as a medical expense when you file your income tax return, as noted above. According to the Canada Revenue Agency, you can claim the entire amount paid “even if they were not paid in Canada.” Keep your receipts, in case the CRA asks to see them. 

What to consider when choosing hearing aids 

In terms of which hearing aids are best for you, that’s like asking, “Which car should I buy?” You have to factor in your budget and which features you need and want. Those will be influenced by your hearing profile (or audiogram), which shows how well you can hear sounds at different pitches and frequencies… assuming you consult an audiologist. 

That said, the following considerations will help you to zero in on the product that’s right for you: 

• Performance: It sounds obvious, but a hearing aid should help you hear better. Some hearing aids or “amplifiers” only increase sound, and if your hearing is distorted, that distortion is simply made louder. (This is why I’d caution against buying the ultra-cheap devices available on massive e-commerce platforms. Yes, they’re $20, but you get what you pay for.) Newer generations of hearing aids are designed to minimize sound distortion, and some go a step further and modify what you’re hearing, depending on the setting—be it your home, outdoors or a busy restaurant. As discussed earlier, the latest hearing aids are powered by AI, so they can independently adjust and optimize the sound you hear.
  
• Design: Gone are the days of all hearing aids all looking the same. You can choose from in-ear, behind-the-ear and invisible models, the latter of which are placed inside the ear canal. Plus, you can get hearing aids that match your skin tone, or stand out with bright colours.
  
• Power: Hearing aids are either rechargeable (with built-in batteries) or powered by batteries that need to be changed every three to 10 days. An insider perspective, based on my dad’s use of battery-powered hearing aids: constantly replacing batteries means added cost, inconvenience and environmental impact—not to mention that you need nimble fingers.
  
• Connectivity: A growing number of hearing aids offer Bluetooth connectivity, so you can connect with your phone and answer calls. Hearing aids from some manufacturers, such as Starkey and Phonak, also connect with Bluetooth accessories such as remote microphones (used by the person you’re talking to) and “TV streamer” devices that feed audio directly into your hearing aids. 

Making a sound decision 

On my own journey of deciding which hearing aids were right for me, comfort, appearance and functionality were key considerations. I ultimately chose to go with in-ear Starkey Genesis AI ITE rechargeable hearing aids. In addition to enhancing hearing in challenging environments (such as busy rooms), they’re also waterproof. (I don’t plan to swim with them, but I could perhaps wear them on a long run.) 

Unlike my Dad’s “flesh-coloured” in-ear hearing aids, mine are black, and friends have told me they look like earbuds. I suppose the only potential downside I’ll experience while wearing them in a meeting is that people might think I’m tuning them out!

Yet another appealing design feature: these hearing aids were form-fitted to my ears using a mould, making them more comfortable to wear than a “one-size-fits-all” off-the-shelf product.  

Also, I’m now able to “connect” to our television via Starkey’s streaming device, resulting in a better listening experience (for example, sound in stereo, not unlike when you connect to your phone with earbuds), and the ability to control the volume without blasting my wife’s eardrums while watching a show. 

Truth be told, I would have chosen what are known as “ear canal” hearing aids (a.k.a. “invisible hearing aids”) that you can’t see—but those aren’t rechargeable and don’t have Bluetooth. So, ironically, despite my reluctance to wear a visible product, performance trumped my choice of design. 

Further to that, ultimately, this model’s AI performance and ability to adapt to changing environments are what won me over. That isn’t to say everyone needs hearing aids with AI (although, at some point, I expect all hearing aids will have this feature). 

Glista provides an easy explanation to help you to decide whether it’s worth paying the extra for hearing aids with AI: “It all depends on the listener’s needs, on how active they are, how many activities they’re pursuing in their daily life and whether they feel they’re digitally inclined or they want to learn how to use these technologies.” 

The flipside of this, she says, is that “if there isn’t a lot of change in the daily environments experienced by a person, the demand for extra features in the hearing aid wouldn’t be as great.” And, of course, “with higher technology levels comes higher cost.” 

Hearing aids aren’t just good for your hearing

If you’re still on the fence about getting hearing aids, consider this: There’s a growing body of evidence that hearing loss, if left unattended, can contribute to a range of health- and cost-related issues, including depression, social isolation, impaired memory, mental decline and lower household income (linked to lower job performance and possible loss of employment). 

With that in mind, if you’re experiencing hearing loss, the decision to fast-track rather than delay the purchase of hearing aids, regardless of which model you choose or budget you decide on, is arguably one of the smartest investments you will ever make. 

More about spending:

• Why is chocolate getting so expensive?
• Why are vets so expensive?
• Why is booze so expensive in Canada?
• Best cash back credit cards in Canada
• As food costs rise, our grocery shopping habits are changing

The post Why is the cost of hearing aids so expensive in Canada? appeared first on MoneySense.

According to the latest monthly affordability report from Ratehub.ca (Ratehub Inc. owns both Ratehub.ca and MoneySense), it became easier to qualify for a mortgage for the average-priced home in every market studied across Canada—a first since January. To show how borrowing conditions are evolving in real time, the calculations reveal the minimum annual income required to buy an average-priced home in some of Canada’s major cities based on month-over-month real estate data. The analysis is based on the average five-year fixed mortgage rate, as well as the resulting mortgage stress test, in addition to average home prices as reported by the Canadian Real Estate Association, for the month of July.

This latest edition (updated monthly, so bookmark this page) is impacted by the recent rate cuts from the BoC which are now making their way into consumer mortgage rates. The two quarter-point decreases made in June and July have cumulatively brought Canada’s benchmark cost of borrowing from 5% to 4.5%. In addition to Canada’s prime rate lowering to 6.7%—which has in turn lowered variable mortgage rates—dropping bond yields have also pulled fixed mortgage rates down, with the new average five-year fixed rate falling to 5.29%.

Here’s how it played out in housing markets across Canada.

Housing affordability across Canada’s major cities

Check out the chart below to see how affordability changed between June and July in Canada’s main housing markets, based on the income required to qualify for a mortgage. The stress test rates used are 7.47% for June and 7.29% for July. Mortgage rates used are 5.47% in June and 5.29% in July. 

July 2024: How much do you need to earn to buy a home in Canada?

Canadian cities where affordability improved

Where in Canada is owning a home becoming more affordable?

Toronto: Weathering a slow summer

While still among Canada’s priciest housing markets, real estate price growth has stalled in Toronto as home buyers remain firmly on the sidelines. According to the Toronto Regional Real Estate Board (TRREB), a total of 5,391 homes sold across the Greater Toronto Area region in July. That marks a 3.3% increase from 2023’s even deeper summer doldrums, but slid -13.2% from June. This is due to overall price exhaustion in the market and expectations that rates are set to fall further in the coming months. Buyers aren’t keen to move until they see considerably lower interest rates come down the pipe, all while more supply comes to market. As a result, the average home price fell by $13,000 between June and July, to $1,097,300. That means, if you’re a prospective Toronto buyer, you’d need $5,410 less in income to purchase a home in July, compared to June.

Vancouver: A rebalancing market

Vancouver home sales continued to slide in July, marking a -5% annual decrease with 2,333 properties sold. Meanwhile, sellers continue to enter the market in droves, with new listings up a whopping 20.4% compared to July 2023, reports the Greater Vancouver Realtors (formerly REBGV). That’s provided home hunters with lots of choice, and placed the market firmly in balanced territory. However, such a combination does little to support the city’s average home price, which fell by $9,400, to $1,197,700. As a result, Vancouver home buyers saw their required income fall by $5,020 in July, placing the west coast city in second in terms of improved affordability.

Hamilton: Rising inventory pulls down prices

Hamilton is one of the few markets in southern Ontario boasting an average home price below the $1-million mark, but that hasn’t helped keep sales and home prices from falling. According to the Realtors Association of Hamilton-Burlington, the number of property transactions fell 6.6% year over year, with a total of 804 trading hands. Meanwhile, the months of supply in the region rose above four for the first time since 2010 for July. That’s led to the average home price dipping $6,400 to $843,500, and the required income for home buyers down by $3,510.

Canadian cities where affordability worsened

Decreased mortgage rates actually made it easier to purchase a home in each of the 13 markets shown above, but some areas saw more relief than others. Here are the markets where borrowing costs eased by the smallest margin.

St John’s: No slowdown in sight

Unlike other parts of Canada, sales here have remained brisk throughout the summer on the east coast. According to the Newfoundland and Labrador Association of Realtors (NLAR), home sales rose 15.7% year over year in the region in July, at 641 units—14.5% above the 10-year average. Meanwhile, new listings in the city came in 7.8% below that long-term benchmark. That led to a snappy uptick in prices, with the average in St. John’s increasing by $4,500 to $349,700. However, lower mortgage rates were enough to offset this increase, with the required income dropping by $160.

Fredericton: Steady summer demand

Similarly to Newfoundland, New Brunswick real estate has remained in high demand throughout the summer months. A total of 931 homes sold across the province in July, marking a 12.2% increase from last year, also 4.7% above the 10-year average. Sales were up 2.3% in Fredericton, specifically. In response, the average home price rose by $3,600 to $311,800. The required income to qualify for a mortgage, meanwhile, dropped by $210.

Regina: Tight seller-friendly conditions

As has been the long-term trend, the Prairie real estate markets are booming, with sales in Saskatchewan reflecting strong housing market demand, up 10% annually with 1,667 transactions. That’s offset any significant relief in supply, with tight seller-friendly conditions across the province’s major markets. In Regina, the average home price increased by $300 to $318,400. However, lower mortgage rates decreased the required income by $830, compared to June. 

How much mortgage can you afford? How much house can you buy?

The above chart shows just how mortgage borrowing conditions shifted on from June to July, based on the required income needed to purchase the average-priced home in each region. Canadian home mortgage borrowers looking to calculate their own affordability, or are shopping around for the best mortgage rate, can use the MoneySense mortgage affordability calculator, which personalizes outputs based on income, existing bills and debt obligations, as well as overall debt ratios.

Will housing affordability continue to improve for Canadians?

Based on recent economic and inflation numbers both out of Canada and the United States, it’s looking all the more likely that interest rates will lower in North America until well into 2025.  Currently, analysts are expecting the BoC’s trend-setting overnight lending rate—which sets the prime rate and variable borrowing products in Canada—to lower to a range between 2.5% to 3% by next year. 

Should this materialize, we could see mortgage rates in Canada go as low as 3.45 at that time, which will help improve affordability further. That’s assuming home prices don’t overheat in the meantime.

Check this table to compare mortgage rates in Canada right now.

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Read more about mortgage affordability:

• Where to buy real estate in Canada
• The complete guide for first-time home buyers in Canada
• Tools to calculate your mortgage payments and costs in Canada
• Mortgage refinance calculator
• Mortgage renewal calculator

The post How much income do I need to qualify for a mortgage in Canada? appeared first on MoneySense.