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  • Frank Tian

💰 6 Consumer Credit Items To Know in 2023 Canadian Budget

All appear in the 1st chapter “Making Life More Affordable and Supporting the Middle Class”, a clear indication of the policy priority.

📌 Mortgage

A guideline will ensure existing mortgage holders have fair and equitable access to relief measures, “without facing unnecessary penalties, internal bank fees, or interest charges”.

With the fastest rate hike in the past 12 months, sharply rising mortgage payments first hit variable rate holders then fixed rate holders that seek to renew. Reasonable relief measures would benefit both borrowers and lenders.

📌 Housing

Little measures to provide rental/owner housing supplies.

The federal government needs to do more on the policy side, working with provincial/municipal governments. Before that happens, we will continue to live with high housing prices and high rent.

📌 Payday Loan

The max fee per $100 drops to $14.

Every recession would highlight the high-cost financing and bring in new measures.

Post the 2008 Great Financial Crisis, a series of provincial regulations lowered the payday loan cost from $21-$23 per $100 loan to $15-$17.

The new measure is one step further to limit payday loans, which has been on the decline with regulations and new financial products such as small-dollar loans and early wage access.

📌 Interest Rate Cap

The criminal interest rate threshold is dropping from the equivalent of 47% to 35%.

The lower caps on payday loan fees in the period 2016-2018 have led to the subsequent rise of high-interest, high-dollar installment loans. But not everyone is financially savvy enough to take only what they can afford.

The new APR cap will impact most of the high-interest, high-dollar loan operators.

📌 Credit Card Interchange Fee

The government has secured commitments from Visa and Mastercard to lower interchange fees for small businesses. Eligible small businesses are expected to save ~$1 billion over 5 years.

Small businesses have been hit hard during the pandemic. Any cost savings help.

📌 Student Loan

“Increasing Canada Student Grants by 40 percent—providing up to $4,200 for full-time students.

Raising the interest-free Canada Student Loan limit from $210 to $300 per week of study.

Waiving the requirement for mature students, aged 22 years or older, to undergo credit screening in order to qualify for federal student grants and loans for the first time.”

Canada’s higher education is not the most expensive, but the cost has been steadily rising over time. The enhanced measures provide assistance to those in need.

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