Real Estate Influencers, Canada’s Unjustified Recession, UK Crisis: Must-Read Business and Investing Stories

Caught in a week that got away? A weekly digest of The Globe’s most important business and investing stories, including professional insights and analysis, stock tips, and portfolio strategies.

Are you financially prepared for a recession?

The recession we are facing may be the most unfair in history. Rob Carrick writes that never before has there been such a clear line between those who can arm themselves with their savings and those who cannot. While many Canadian households were able to stockpile cash during the pandemic lockdown, others had never set aside cash reserves and have not used those savings since. Stockpiling can protect you from the inevitable disruption of income and job loss during a recession as employers respond to a weakening business environment.

Homeowners with variable-rate mortgages are paying more

If you’re a Canadian homeowner with a variable rate mortgage, you may not be sleeping very well these days. With interest rates soaring, banks are contacting many of their customers to inform them that they have reached their trigger rates. This suggests higher monthly costs due to more homeowners and longer repayment terms. As Salmaan Farooqui reports, the majority of variable mortgages in Canada are fixed payments, and payments remain the same even as interest rates rise moderately. However, interest rates have risen dramatically this year, so variable mortgages are starting to hit what is known as the trigger rate. So, with the Bank of Canada widely expected to announce another big rate hike by the end of this month, is it time to switch to fixed-rate mortgages? Explore the pros and cons of surviving.

Tenants: Prepare for the competition – and pay more

Bid wars and bully offers are no longer reserved for homebuyers. The area’s bright red rental market is highly competitive. premium. A record 36% of GTA condos were leased above the listing rate in the third quarter, and on average these condos were rented at a premium of $129 per month, according to Urbanation data. is also a record high. The average condo rental is $2,733 per month, up 18.6% from a year ago. Will this trend continue, or can renters expect some easing soon?Matt Lundy examines the data in his Decoder this week.

Inflation continues to slow, but not fast enough

Canadian inflation eased slightly in September, but not as much as financial analysts had expected, paving the way for another significant rate hike by the Bank of Canada on 26 October. report. This is his third straight month of slowing, down from his 7% in August. Gasoline prices fell 7.4%, while food prices rose 11.4%. Central banks are globally expected to raise interest rates sharply again to curb inflation, possibly to 4%, the highest level since 2008, more economists now predict. doing.

Real estate influencers are fueling Canada’s housing crisis

More and more real estate investors are using social media to fund real estate deals. This helped fuel an investment fever in Canada that was fueled when home prices skyrocketed and COVID-19 restrictions forced people to spend more time online. As Rachelle Younglai and Jessica Burgess report, in her first year of the pandemic, investor purchases of residential real estate doubled hers in Canada. By the middle of last year, the investor accounted for more than a fifth of his home purchases in the country. But when things go wrong with real estate, they can really get you into trouble. Rising interest rates and a cooling housing market may prevent promoters from delivering promised returns to investors, resulting in pressure to raise rents further and exacerbating the country’s affordable housing problem. Regulators don’t seem to pay attention, and in the absence of enforcement, promoters raise funds with little to no legal scrutiny.

Liz Truss is gone, but Britain’s crisis continues

Liz Truss stepped down on Thursday after a short and chaotic term marked by economic and political turmoil, making her the shortest prime minister in British history. On the 23rd, there was chaos after then-new Finance Minister Kwasi Kwarten announced billions of pounds in underfunded tax cuts. The Bank of England has been forced to make emergency bond purchases to stem a plunge in her £2.3 trillion market for government bonds that threatens to wreak havoc on the pension industry and heighten the risk of a recession. Mr. Kwarteng was quickly fired and his successor, Jeremy Hunt, scrapped “nearly all” of the economic plan, curtailed Mr. Truss’ vast energy aid program, and made a historic move to restore investor confidence. made a U-turn. Mark Carney, Governor of the Bank of England from 2013 to 2020 and former Governor of the Bank of Canada, said: “The experience in the UK suggests that in an environment of tightening monetary policy, tensions between various macroeconomic objectives will rise. I am emphasizing that,” he said. Just hours after Truss resigned.

You’re all set, so get ready for the next week with Globe’s investment calendar.