Mortgage 101 – November is Financial Literacy Month! | November 2022 Part 1

In this episode of Mortgage 101 with Clinton Wilkins and Todd Veinotte, as heard on CityNews 95.7 and CityNews 101.1, the guys talk about Financial Literacy Month! In this kick-off episode, the two dive into topics like inflation, increasing mortgage rates and consumer good costs, and wrap up with some financial advice going into the holidays and into 2023.

Mortgage 101 with Clinton Wilkins & Todd Veinotte: November is Financial Literacy Month!

Don’t feel like watching the video? Check out the transcript below.

Transcript:

November is Financial Literacy Month!

Todd Veinotte: [00:00:00:01] So it is November and that means drumroll, please.

Clinton Wilkins: [00:00:04:26] It is financial literacy month.

Todd Veinotte: [00:00:06:15] Where did you come up with Financial Industry Month for November. Why is that?

Clinton Wilkins: [00:00:09:23] Well, I didn’t come up with it. I didn’t come up with it.

Todd Veinotte: [00:00:12:09] No. Trying to give you I’m trying to give you props. People don’t know that you didn’t come up with it.

Clinton Wilkins: [00:00:16:02] I know. So Financial Literacy Month has been going on for years now and the Financial Consumer Agency of Canada is the one who picked November as a date to really focus on financial literacy. And, you know, I think really now in 2022, talking about financial literacy is more important now than it has been even in the past.

“Things certainly have taken a turn.”

You know, I think through the pandemic, a lot of consumers, we’re in pretty good shape financially, Todd. You know, maybe people weren’t spending as much, maybe they weren’t borrowing as much. Maybe, you know, they weren’t eating out and travelling and all these things. But I think now that the economy is opened up. Things certainly have taken a turn.

As we know, with inflation. Inflation is really been at all time highs. You know, we’re seeing some good signs that inflation is starting to soften. Obviously, some of the impact that the Bank of Canada has had is now impacting the end consumer. But the cost of groceries, the cost of fuel and really the cost of mortgage interest rates really have taken a toll on many households.

And I think just being financially aware and focusing on financial literacy month this November, I think we’ll pay you dividends going into the holidays and really into 2023. You know, I think 2023 and really the rest of this year is going to be really about tightening the belts. And I think it’s going to be about focusing on needs versus wants.

And I know we’ve touched on this, but I think it’s going to be even more important now, especially with going into a more challenging time economically for this country and really for many countries across the globe. Everybody suffering from the similar type of issues with inflation.

“We forget that these things are all cyclical.”

Todd Veinotte: [00:01:53:19] And I think everybody kind of, we live in here now and we don’t understand, or not that we don’t understand, we forget that these things are all cyclical.

It’s not like this has never happened before. We’ve had these patterns before. We’ve had, I don’t want to say boom, bust necessarily, but we’ve had times of plenty there’s times of not plenty. There’s times in which people need to need to react to what’s going on around them. And I think it’s important.

But to all of this I think that programs like what we’re doing and what is available online and the media often gets railed, social media in particular as being a negative impact in people’s lives. But I think it can be a positive impact in people’s lives because people are now hopefully educating themselves to go through these ebbs and flows of what’s happening in this cycle, right?

Clinton Wilkins: [00:02:42:28] And you know what? I think if anybody who has lived through any of these past economic challenges, this is not the first time that I can remember where we’ve had to maybe financially tighten our belts. And this isn’t the first time that we’ve been in a situation where we’ve had a higher inflation and it’s not the first time that we’ve even seen mortgage rates that are where they’re at right now.

I started 17 years ago, Todd. I remember what it was like in the early 2000s and mid 2000s, and the rates were higher then than they are now. And, you know, I think we’re suffering a little bit of shock just at how quickly things can change with inflation, with mortgage rates and these things. But we need to remember that we’re not in a situation where the rates just went up over overnight. You know, the rates certainly have been increasing.

The Bank of Canada gave Canadians a clear message

And I think obviously the Bank of Canada has put out a clear message that they will continue to increase the rates to bring inflation in line if that’s what needs to happen. You know, many economists think that we’re nearly at the top of what things look like.

You know, Benjamin Tal was doing a talk when we were in Vancouver a few weeks ago and we mentioned that, you know, he thinks that we’re probably another maybe 50 basis points to the ceiling. Again, economists aren’t experts at knowing exactly what’s going to go on.

Todd Veinotte: [00:04:08:21] They’re experts, but they’re not prophets.

Clinton Wilkins: [00:04:11:00] They’re not prophets, I think experts at reading the data, but the data changes so quickly, Todd. So it’s hard for even an economist to know what’s going to go on. And, you know, a month, two months, three months down the road.

Todd Veinotte: [00:04:21:20] Well, let me let me ask you this. I want to interject a little bit here. We’ve got a lot of young people, and it’s great that we’ve got a lot of young people in in Nova Scotia and then, of course, in Ottawa, young people who bought houses over the last decade. Graduated. And times have been pretty good since 2008. I mean, let’s face it, after the 2008 thing, things have been pretty darn good.

So for a lot of those people, they graduated, they went to school, they bought their homes. It was pretty good times. Happy times are here again. And unless you’ve lived something, you don’t, you hear about it in the history books, but until you go through it.

So do you think for some of those people that this is this is a wake up call for a lot of these people who have not had to go through these types of changes?

“I think it’s certainly a wake up call.”

Clinton Wilkins: [00:05:06:01] I think it’s certainly a wake up call. And I think some people have not had the wake up call yet. You know, I think that there’s some consumers and we talked about it before we started our show. You know, we were just talking a little bit. There are some consumers that are in a low fixed rate.

Low fixed rate mortgage product that they had from four years ago, three years ago, two years ago. That’s going to be coming up for renewal. And some of these consumers are renewing into mortgage rates that are double and triple what they had. Which certainly can have an immediate impact.

And, you know, certainly a lot of consumers that are in a variable, you know, they’re feeling the pain, Todd. I’m in a variable, you know, and but the one thing that we need to remember is with a variable, currently it’s high, but it’s going to go down.

The thing is, with the fixed rate and almost provide some type of false security in a way. And I have clients that are in a fixed rate that they think that their term is never going to end.

Clinton Wilkins: [00:06:01:15] But there is a finite amount of time. You know, certainly the risk tolerance, I think, is changing for people. And obviously, the fixed rates right now are very, very high compared to where they have been. You know, at a fixed rate. We’re talking like mid 5% range right now. And that’s not historically high.

That’s probably somewhere around you know, obviously it’s still higher, but it’s more around maybe what the median mark looks like. But, you know, a lot of economists are projecting again, they are not profits they don’t know, but they think that we’re going to be in a recession type situation by the end of next year.

So really, the pain that a lot of customers are going to see in consumers are going to see, the pain is going to happen for the next 12, 14, 16, 18 months. But how can you get through that, Todd?

You know, how can you make sure that you’re protected financially and how can you make sure that you’re making the best decisions for yourself and for your household over this next period of time, which can be and will be challenging for many people.

Advice you have for people going into the holidays and 2023

Todd Veinotte: [00:07:00:26] Yeah. Okay. So how do they? What some of the advice that you give.

Clinton Wilkins: [00:07:04:20] You know, we’ve touched on, you know, needs versus wants. I think really keeping your unsecured debt under control. I think that would that’s a huge one. For the consumers that do have a lot of unsecured debt now you know focus on paying that down. Make those payments now while you can because consumer goods may still become more expensive.

Right now, as we know, inflation is almost 7%. So every month that goes by, technically things will get more and more expensive. So I would definitely focus on only spending money when you need to spend. And if it is more of a want, make sure that’s more planned out. And, you know, thoughtful.

I think sometimes, you know, we’re in such an instant gratification culture. We want it, we buy it. But there certainly can be implications, obviously, down the road. You know, we’re talking things like borrowing costs. We have a lot of consumers that do not use credit cards the way they’re supposed to be used.

The whole idea about a credit card is that you’re not supposed to pay interest, you’re supposed to use it, and then you’re supposed to pay it. And it certainly is credit that’s available from your bank or financial institution that’s providing you this card. But you’re not supposed to carry a balance on the credit card.

And I think that’s really something that the culture has shifted. And we certainly do have a lot of consumer debt in Canada.

Todd Veinotte: [00:08:20:24] Yeah, well, heading into Christmas as well, which is not a good scenario.

Clinton Wilkins: [00:08:24:25] No. And I think sometimes people always want to like give a Christmas to their family. Whether they have kids or whether they have a spouse or whatever their situation is. I think this year it’s going to be maybe more about experiences versus material things, and that’s okay.

I think now November is a great time to have these conversations really at the dinner table. I know some of this is taboo, but have the conversations and I think that’s going to pay you dividends going into the new year.

If you have any questions, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.

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