Four tips if your rate is about to reset. January 30, 2023 Sign Up | Made in Canada IN THIS ISSUE Estimated read time: 7 mins 📈 Tiff’s teeny rate hike 🎤 Bieber’s Baby sale 🏠 Mortgage payment mitigation Bob and the Biebs have at least two things in common: they look good in shades and also sold their music catalogs for Everest-size mountains of cash. For more on Bieber’s deal, see below. | Getty Images THE WEEK IN MARKETS Markets Were Dull. Yay? Look, we’re not supposed to say this, because it doesn’t exactly make for punchy copy, but last week was kind of boring. In a good way! The relief rally didn’t die: the S&P was up 2.5%, TSX 1%; both are up about 6% YTD. So, boring in the way that “everything’s going ok” is boring. The big excitement is coming this week when tech reports its earnings and the Fed decides how much to hike interest rates. Will Powell feel optimistic about inflation (like Tiff) or go nihilistic? Did tech do OK or will earnings reflect some unseen weakness in the economy? It could be a wild one, or, let’s hope, maybe just boring again. THE WEEK IN ONE NUMBER 1.9% Canada’s apartment vacancy rate. That’s the lowest it’s been in two decades thanks, in part, to rising mortgage rates that have driven would-be buyers to rent. WHAT HAPPENED LAST WEEK IMPORTANT Tiff hits pause. After a year of aggressive interest-rate hikes, the Bank of Canada kicked off 2023 with a mere 0.25% bump — and a pinky swear to hold off on future moves while everybody waits to see if inflation continues to fall without the economy or the job market tanking. It’s a big test for Canada and for Tiff’s credibility. Time to find out how soft or hard this landing may actually be. Big Oil gets slick on emissions reduction. We already knew oil industry profits were gushing last year, and we’ll soon get quarterly earnings reports to confirm just how much, starting with Imperial ($IMO.TO) this week. But in an interview Wednesday, the head of Cenovus ($CVE) revealed exactly what’s going to happen with all that money. Instead of clean tech investments, it’s going toward debt and stock buybacks. Good for investors, not so good for keeping the planet alive. Crypto’s big January climb still leaves it deep in the hole. In the past month, Bitcoin’s up by 40%, Ethereum’s up by 30%, and FTT — SBF’s little token that couldn’t — is up a hair-raising 100% But the great news lasts only until you zoom out: considering crypto fell by 70% from its US$3 trillion peak, it’ll take gains of another 176% for HODLers to be made whole. INTERESTING Phew! At least one huge hedge fund made a ton of money. Why is this worth mentioning? Hedge funds lost a collective US$208 billion last year (including a whopping $42 billion from Tiger Global). But over at Ken Griffin’s Citadel, they couldn’t pack the money into their tiny Porsche frunks fast enough. The fund cleared $16 billion in 2022 — the most ever for a hedge fund. That would be impressive any year, but in 2022, it feels miraculous. Biebs sells out. Canada’s favourite doughnut salesman sold the rights to his music catalog to Hipgnosis ($HPGSF) for US$200 million Tuesday, joining Bruce Springsteen ($550 million), Bob Dylan ($300 million), and others who’d rather take a lump sum than wait for all those residuals. What’s unique about Justin’s case is that he’s not yet 30. Since the deal covers only his pre-2022 work, he could sell an entire new catalog before he’s even old enough for routine colonoscopies. Canada’s favourite telecom board game, Oligopoly, gets even less fun to play. The somehow-still-going-on merger between Rogers and Shaw got one step closer to approval on Tuesday, when the Federal Court of Appeal blocked the Competition Bureau from blocking the deal. Both stocks were up on the news, even if fans of lower cell phone bills weren’t. FROM OUR SPONSOR Weekly draws from Jan. 23 to Feb. 13. Three prizes of $30,780 and seven prizes of $6,500. Must be new or existing Wealthsimple client. Make a deposit or transfer of at least $1 or essay method to enter. Each dollar deposited will earn one entry. No purch nec. Canadian residents and age of majority+ only. STQ required. Full rules wsim.co/maxout. THE FOMO INDEX by Stacey Woods IMPORTANT 🤖 ChatGPT can pass the bar, MBA exam, and medical licence test and will go into business suing itself for malpractice. Source 🤨 Quiz: Which Replaceable Human Are You? BuzzFeed stock soars amid layoffs and news it’ll create content with AI. Source 🚀 The final frontier, eh? Canada is getting into the rocket-launching business. Source 👎 Poll: Half of Canadians against spending millions to restore crumbling 24 Sussex. The other half thought that was Hogwarts. Source CRASH & BURN TO THE MOON 🍃 But you agree, Mr. Musk, it’s the kind of thing you’d say. Defendant Elon denies $420-a-share tweet was weed joke. Source 🍬 M&M’s drop cartoon spokescandies after Brown and Green ditch their heels and stop arousing Tucker Carlson. Source 🏠 Other poll says WFH saves commuters 72 minutes a day that could be spent taking more polls. Source 💰 What about a zillion dollar coin? Actual plan to mint a $1 trillion coin to solve the U.S. debt-ceiling crisis is rejected. Source WHO CARES WHAT’S UP THIS WEEK The U.S. Fed meets (Wednesday). Powell gets his turn to (maybe) tell the world what it’s longed to hear. A bunch of tech companies that start with “A” report quarterly earnings (Thursday). Too bad Apple, Amazon, and Alphabet are expected to pull off B- performances. THE BIG IMPORTANT STORY REAL ESTATE A No-Tears Guide to Mortgage Renewals Two-thirds of Canadians have five-year fixed-rate mortgages. For about the past decade, with interest rates hovering around 1%, this wasn't much of a problem. Well, these days, most banks are charging around 5%. (Thanks, inflation!) That means if you borrowed $500,000 to buy a home five years ago, your mortgage payment could go up by $1,200 a month if you locked into another five-year fixed term right now. And let’s just say people are pretty panicked about such possibilities. Fortunately, you can do a few different things to get ready for a rate reset and mitigate the horribleness. TLDR’s Sarah Rieger recently spoke with David Larock, a veteran Toronto mortgage broker, who explained how you can manoeuvre your way to a less painful monthly payment. Pick up the phone. When your mortgage rate resets, it’s a chance to negotiate a new agreement with your current lender. But many homeowners don’t bother, says Larock. He learned this when he was a mortgage lender: “When we’d send out renewal letters, the first letter offered our posted rate — which would be a crazy high rate that wasn’t remotely competitive. Yet a third of the borrowers signed the letters without calling us.” And banks really love when that happens. Painful news for introverts: Larock says picking up the phone for a five-minute call with your lender can often get 1.5% knocked off your renewal rate. (That amounts to $7,500 on a $500,000 mortgage.) Shop around. When your rate resets, you can go out and find a better deal elsewhere and refinance penalty-free. That’s why your current lender will start pushing you to renew months beforehand. “Lenders will play on the fear that you should lock in early to avoid [the] risk” that rates will rise further, Larock explains. Don’t fall for it. Comparison shop with other banks or credit unions before signing any contract. Bear in mind that if you lock into another five-year fixed term (like a lot of folks do), you can refinance later if rates fall. But a word of caution... Be sure to read the fine print. The biggest mistake Larock sees is buyers skimming over a contract’s small print. Homeowners will choose one five-year fixed mortgage over another to save 0.05% on interest, he says, but then two years later, they’ll realize that the penalty to switch lenders midterm is $10,000. Ideally, you want to avoid any contract that carries a steep penalty for breaking your mortgage so, if need be, you can switch lenders down the road with minimal expense. Stretch out your payments. OK, so let’s say you decide to stick with your current lender for one reason or another. In that case, if you requalify, you can ask to extend the loan’s amortization period and essentially stretch out the length of your contract. You might be able to extend your current mortgage so that it’s amortized over 30 years, say, instead of 25. You would end up paying more interest over time that way, but your monthly mortgage payment could get a little cheaper. OTHER VERY GOOD READS 💪 How to Be 18 Years Old Again for Only $2 Million a Year* An über-rich entrepreneur tries to “reboot” his body. | Bloomberg 🥣 An Ode to Kraft Dinner Admit it: the Mac & Cheese is damn good. | Catapult 🚗 They Poured Their Savings Into Homes That Were Never Built* The personal toll of China’s real-estate crisis. | The Wall Street Journal *Article is paywalled, which, yeah, is kind of annoying. But we think good journalism is worth paying for. READER FEEDBACK Last week, we joked that Alberta was easily turned into a post-apocalyptic wasteland for the filming of HBO’s new zombie drama The Last of Us. And some readers weren’t amused! So, were we being jerks, or are we allowed to poke some good-natured fun at Alberta? (The Calgarian on our team said it was okay!) And if not, what place can we make fun of? Click on “Thoughts on Today’s Issue” below and weigh in. SHARE TLDR WITH FRIENDS 🤝 Put this link in your group chats, in your Slack threads, on a tattoo on your back — whatever works for you! THE WISDOM OF TWITTER One more thing AI can do? Make you feel seen. THOUGHTS ON TODAY’S ISSUE? Love it Good So so This week’s newsletter contributors: Brennan Doherty (writer), Devin Gordon (writer), Stacey Woods (writer), Sarah Rieger (news writer), Ambrose Martos (fact checker), Ciara Rickard (copy editor), Sara Black McCulloch (fact checker), Jared Sullivan (senior editor), Peter Martin (senior editor), Kat Angus (managing editor), and Devin Friedman (editor-in-chief). Disclosures: Contributors to this newsletter own stock in Amazon and Alphabet. Wealthsimple Media Inc. 80 Spadina Ave Suite 400 Toronto, ON, M5V 2J4 Replies to this email address are not monitored. Have questions? Visit our Help Centre or submit a request to our Client Support team. 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