How are Oil Prices Affecting Canada
The decreasing prices at the gas pump are revealing how are Oil Prices affect Canada and are a welcome sign to many Canadians who have seen prices moving up over the past several years. However, the oil companies and associated businesses in western Canada had become accustomed to operating budgets that enjoyed the profits that came with oil prices over $100 per barrel. Now that prices have sunk below $50 per barrel and show no signs of rebounding significantly any time soon, companies in Canada are showing some signs of strain and passing those along to the general economy. The oil boom in North America, powered by the “fracking” technology that has made more oil accessible for exploration, has brought prices down. OPEC has not cut its production to respond; the apparent hope is that production in North America will drop again once companies realize that prices are going to stay low.
The implications in Canada are fairly significant. In January 2015, Suncor Energy, Inc., the largest oil sands company in Canada, announced it would be laying off 1,000 workers and cutting its capital budget by $1 billion. Most of the layoffs were expected to involve contract positions, but some employees would be affected as well. All projects that the board had not yet approved, such as the White Rose development and the MacKay River project expansions in northeast Alberta, have been put on hold for now. Even so, the company is moving forward with approved projects like the $13.5 billion mine in Fort Hills, north of Fort McMurray. While housing starts and employments have been holding steady, the Conference Board of Canada announced that recession would ensue in Alberta if oil prices held steady. Canadian oil is the largest importer to the United States, and Alberta holds the third most oil reserves, behind Saudi Arabia and Venezuela.
Losing your job because of corporate layoffs is a major blow, particularly if you do not have adequate savings for your living expenses. Too many families are already living from paycheck to paycheck, even in the middle class, as their spending habits do not include enough saving in some cases, while others deal with unexpected situations like medical expenses.
The good news is that if you have already entered into a mortgage and now feel like you will not be able to meet the obligations of your current loan, Amansad Financial has a number of creative options that have worked for many of our clients. When Canada made changes to existing mortgage rules, one alterations included the fact that lenders could use available balances as part of judging qualification for potential borrowers. This means that if you have an Unsecured Line of Credit that has a zero balance but the limit is at $100,000, the lender can use $3,000 (3 percent) to go toward outstanding credit commitments each month.
Many Canadians are already caught in a vicious cycle of consumer debt spending, and if layoffs come people need to be able to access their equity and other forms of money in order to meet their monthly needs and begin reestablishing their savings once again. In the meantime, though, lending vehicles such as a home equity line of credit or a private mortgage can give you a “bridge” to further prosperity. Even though you may not have a job now, the likelihood that you will not have a job in several months or a year is still fairly low. It can be difficult to maintain optimism during a time like this, as week after week go by without a job offer, while bills keep showing up in the mail and collectors start calling.
A private lender looks at the value of your home rather than your creditworthiness and will often replace your entire mortgage. Some private loans only require interest payments, but you have to be prepared to pay the entire balance at the end of the term, which is generally only a couple of years away. This payment could take the form of a new bank loan, so it’s important to know that this is a temporary solution — but much better than losing your home in the wake of a layoff.
Get in touch with Amansad Financial if you are concerned about your ability to stay in your home and stay current with your mortgage. We can help you find lending solutions to keep you out of foreclosure and help you get back on your feet.