Carrick Talks Money:  Ways in which your finances are tied to the housing market

Carrick Talks Money: Ways in which your finances are tied to the housing market

Let’s take a look at all the ways your finances
are connected to the housing market. Of course there’s your house,
that’s going to rise in value if the market keeps doing well and it will fall if the market pulls back, but a lot of people
have more ties to the housing market than they may realize. Their savings accounts may be connected to the housing market Their GICs and quite possibly their investments. Home Capital is a company
that’s in the news right now. It’s had its struggles with securities regulators. Its share price has been down and people have been pulling their money
out of Home Capital’s high-interest savings accounts offered
through subsidiaries, Home Trust, Home Bank and Oaken Financial. This money is protected by CDIC but people are feeling
the stress. If the housing market goes down,
it could hurt Home Capital. Maybe my money won’t be safe. I’d rather have it in hand
and so they’re taking it out. Realize that some issuers of
high-interest savings accounts are big in mortgage lending and that could have an impact on you, if the housing market falls. Same goes with GICs. If you have a lot of housing exposure maybe you get your GICs from somebody who
doesn’t do a ton of mortgage lending. Let’s look at your investments. You know the Canadian stock market is 33% tilted towards the financial sector primarily banks. So you’ve got a lot of exposure to banks
in a standard type of equity fund, an equity ETF or a portfolio of stocks. So, spread the exposure thin and make sure that all aspects of your finances aren’t tied to the housing market. If it goes down you don’t need stress on all financial fronts.