Home Economics: Higher rates to widen wealth divide between savers and borrowers

Home Economics newsletter: The divide between savers and borrowers is about to worsen, a look at how much wage growth is lagging inflation and navigating all the ways you can save for a down payment

The Bank of Canada is full steam ahead on raising its benchmark rate to bring inflation back down to its target. That means savers will be benefitting from higher return rates on their high-interest savings accounts, GICs and fixed income investments, writes personal finance columnist Dale Jackson. But there’s two sides of every coin. While savers are celebrating, borrowers will take a hit.Inflation far outpacing wages: BMO  BMO Capital Markets Chief Economist Doug Porter laid out exactly how wage growth has been lagging in Canada compared to the skyrocketing cost of living (which wouldn’t surprise many Canadians, especially those with a low or fixed income). Porter said the pace of inflation is near double wage growth.A third of Canadians don’t earn enough to pay their bills: Poll  “It's a bit unnerving. It almost seems unrealistic,” said Grant Bazian, president of MNP Ltd. The latest survey from the firm showed 31 per cent of Canadians said they aren’t earning enough income to pay basic monthly expenses. Almost half (49 per cent) said they are within $200 of insolvency. The survey was taken prior to the Bank of Canada’s supersized interest rate hike this month, showing Canadians are already feeling the pinch. Housing could peak this spring: RBC  Canada’s housing market has been breaking records in terms of skyrocketing prices, dwindling supply, and surging demand, but could some relief be on the horizon for buyers? RBC’s Assistant Chief Economist Hogue said the real estate market could top out this spring. Read why he thinks sales activity could “slow more quickly than previously anticipated” here. Canadians increasingly using their home equity  Home prices might now be starting to slow, but the meteoric rise in real estate values has Canadians increasingly tapping home equity lines of credit as the loosening of pandemic restrictions creates temptation to spend more, according to Statistics Canada. The data showed the balance of home equity loans rose at the fastest monthly pace in a decade in February.Navigating all the ways you can save for a down payment TFSAs. RRSPs. And now FHSAs. No, it’s not alphabet soup, it’s the plethora of different savings and investment vehicles available to Canadians that can be used to help save for a down payment. Here is a breakdown of how each of them work, as well as the pros and cons of each account.Scotia says Bank of Canada has a case for full-point hike  Scotiabank argues the Bank of Canada has a "solid case" for deploying as much as a full-percentage point interest rate hike at its next policy-setting meeting. Read why the bank’s Head of Capital Markets Economics Derek Holt said there’s no reason for the central bank to still have its benchmark rate at current levels.  

- That’s how much margarine prices rose in March year-over-year. Here’s a look at price increases of other grocery store staples.