Home Economics: What Bank of Canada liftoff means for you and your investments

Home Economics newsletter: Interest rates are on the rise. This week's newsletter breaks down why savers will likely still be disappointed with the return rates on their savings accounts and what it means for retirement investors

Rates are rising, but savers will still be disappointed: Pattie Lovett-Reid Indeed, the Bank of Canada raised its overnight lending rate to 0.50 per cent this week, but don’t expect return rates on your savings accounts to move up any time soon, wrote CTV Chief Financial Commentator Pattie Lovett-Reid. She said after taxes and inflation, you’ll still see an erosion in the purchasing power of the money sitting in savings accounts because increases in interest payments for depositors typically lag rate hikes.What about the impact of higher rates on your investments?   Higher rates mean higher bond yields, said Personal Finance Columnist Dale Jackson, which could present an opportunity for retirement investors to shift some of their portfolio from stocks to typically-safer fixed income products. For equity investments, Jackson said to continue looking for companies with financial stability and those with consistently-growing earnings.     How high do variable mortgage rates have to be before they drag on housing?   Variable mortgage rates would have to move substantially higher before impacting homebuying activity, experts said. How much? Likely a range of 2.5 per cent to 3.5 per cent, said chief executive officer and founder of Mortgages of Canada, Samantha Brookes. “Fixed rates have already moved up. But the variable rates, for sure, that’s where the impact is,” Brookes said in an interview with BNN Bloomberg. Ultimately, however, with borrowing costs set to rise further, she suggested that if you can afford a property, you should act sooner than later. Work-from-home tax deduction cap increased for 2021  Still working from home? The federal government has extended the temporary flat rate method for claiming home office expenses, along with increasing the maximum amount employees can claim. Designed to avoid the headache of tracking expenses and receipts, on top of a signed T220 form from an employer, the flat claim was initially introduced in 2020 as a simpler alternative. For the 2021 tax year, remote employees can claim up to $2 a day, up to an increased maximum tax deduction of $500, without having to provide receipts. Many Canadians that rent out part of their home don’t tell their insurer: Survey  More Canadians rented out parts of their home during the pandemic, but a new survey for BNN Bloomberg and RATESDOTCA found that many are not informing their insurance companies. According to the survey, only 47 per cent of respondents said they provided official notification to their insurer that they were renting to a tenant. 42 per cent said they kept quiet. But what’s the big deal about keeping insurance companies out of the loop? For one, it can void your insurance policy, leaving homeowners at risk for footing repair costs or clean-up bills. If your undeclared tenant leaves something burning in the oven, for instance, experts say you have already been playing with fire. 

- Desjardins believes Canada could see an $18-billion boost to national household income if women’s wages were equal to men’s in comparable work.

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