Latest news with #Equifax
Yahoo
17 hours ago
- Business
- Yahoo
Canadian banks are resilient and delivering decent results, but real estate risks loom
Despite a challenging economic backdrop, Canada's major banks continue to deliver decent results, underscoring the strength of their oligopolistic market structure and operational discipline. Yet, beneath the surface of earnings beats and dividend hikes, a growing undercurrent of risk is emerging — particularly in the housing market. We've noticed that the phrase 'cautiously optimistic' has become a staple in the forward guidance of Canadian banks in 2025. While earnings remain robust, management teams are clearly aware of the mounting pressures facing consumers and the broader economy. The banks' ability to maintain profitability is largely thanks to their scale, pricing power, and relentless focus on what they've been calling 'operational efficiencies.' These advantages have allowed them to weather rising credit costs and margin compression better than many global peers. However, there is a looming risk that we're keeping a very close eye on: Ontario's real estate market. According to Equifax, the province's 90-plus-day mortgage delinquency rate surged by 71.5 per cent year-over-year in the first quarter of 2025, the highest level since mortgage tracking began in 2012. In total, 1.4 million Canadians, or roughly 1 in 22, missed at least one credit payment during the quarter. These figures point to a growing strain on household finances, particularly in regions where home prices and debt levels soared during the pandemic. The situation is further complicated by what the Bank of Canada has dubbed the 'mortgage renewal wall.' About 60 per cent of all outstanding mortgages in Canada are set to renew in 2025 or 2026. Many of these loans originated during the pandemic at historically low fixed rates, often below two per cent. Even with recent rate cuts, renewal rates remain in the four to five per cent range. The impact on borrowers could be significant. A February Royal LePage survey indicated that 57 per cent of renewing mortgage holders expect higher monthly payments, with 22 per cent anticipating a substantial increase. Alarmingly, 81 per cent of those facing higher payments say they will experience financial strain, and 34 per cent describe it as 'significant.' This wave of refinancing risk could lead to further delinquencies and a potential softening in home prices, especially in overheated urban markets. And it's not just Ontario. British Columbia is showing signs of a sluggish market as well. In Metro Vancouver, inventory levels have surged to some of the highest in more than a decade, with more than 15,000 listings in April alone. Realtors are reporting that buyers are hesitant, and properties are sitting longer on the market. Sales are down roughly 24 per cent year-over-year and remain well below 10-year seasonal averages, reflecting a broader buyer hesitation amid economic and political uncertainty. In a telling anecdote, a local signpost company is now offering credits to realtors who return used signposts — because demand for new listings has outpaced supply of signage. According to Equifax, the 90-plus-day mortgage delinquency rate increased in British Columbia by 37.7 per cent year-over-year in the fourth quarter of 2024. That said, Canadian banks continue to remain a pillar of stability in an uncertain economic environment. Their ability to manage costs, maintain capital strength, and deliver shareholder returns is commendable, especially when viewed against the backdrop of financial volatility. These institutions benefit from a well-regulated financial system, conservative lending practices, and a diversified revenue base that includes retail banking, wealth management, and capital markets. One of the key strengths of Canadian banks is their disciplined approach to risk management. Even as credit conditions tighten, most banks have proactively increased their loan loss provisions, bolstered capital buffers, and maintained strong liquidity positions. This prudence has helped them absorb shocks from rising interest rates and slowing economic growth without compromising their core operations. However, not all banks are equally positioned. Institutions with greater international diversification, such as the Bank of Nova Scotia with its Latin American footprint or Toronto-Dominion Bank and Bank of Montreal with their U.S. exposure, may be better insulated from domestic housing market volatility. Conversely, banks with heavier exposure to Canadian consumer lending and real estate, particularly in Ontario and British Columbia, could face more pronounced headwinds. Many investors remain unaware of the scale of the unfolding bond crisis When riding the market whiplash, structured notes can smooth the journey Investors would be wise to monitor several key indicators in the months ahead. International diversification: Banks with earnings streams outside Canada may benefit from more resilient or counter-cyclical markets. Credit provisions: Rising provisions for credit losses can signal growing concern over borrower defaults and economic stress. Delinquency trends: Watch for changes in mortgage and credit card delinquency rates, especially in provinces with high household debt. Housing market data: Inventory levels, price trends, and sales volumes in major urban centers will be critical in assessing the health of the real estate sector. Ultimately, while Canadian banks are not immune to macroeconomic risks, their structural advantages and conservative management culture provide a strong foundation that hopefully should allow for them to weather the upcoming storm. Martin Pelletier, CFA, is a senior portfolio manager at Wellington-Altus Private Counsel Inc., operating as TriVest Wealth Counsel, a private client and institutional investment firm specializing in discretionary risk-managed portfolios, investment audit/oversight and advanced tax, estate and wealth planning. The opinions expressed are not necessarily those of Wellington-Altus. _____________________________________________________________ If you like this story, sign up for the FP Investor Newsletter. _____________________________________________________________ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Hamilton Spectator
a day ago
- Business
- Hamilton Spectator
This is how to ‘try' not to miss your credit card payments when you're flat out of cash
When you miss payments it's a hit to your credit, but it also means your balance grows — more debt on debt, which is basically compound interest working against you rather than for you. Polling from Equifax shows a staggering number of Canadians have missed credit card payments recently due to the high cost of living, unemployment and an overwhelming amount of pre-existing debt commitments, namely car loans, that were taken out way before all this trade war and tariff business began. And though Canadians appear to be slashing spending left, right and centre, many are still falling behind. The stress of knowing you really can't afford to pay your credit card debt is enormous and probably causing sleepless nights. Try these ideas, and don't delay. Stop all unnecessary spending instantly. Take a deep breath. You can only make a plan if you pause and become completely aware of the full debt situation. Beating yourself up is not going to help. You've got to deal with it, not dwell on it. List all credit cards with balances, interest rates, and minimum required payments. Then, identify how much you owe in total and which card(s) are costing you the most — those with the highest interest. First, do you have any mechanisms at your fingertips to generate immediate extra income? Now is the time to work more, take on extra shifts, activate your old side hustle that got put on ice (babysitting, dog walking, house cleaning, decluttering services, personal training, etc.). File your taxes (even though it's past the deadline), especially considering more than 70 per cent of Canadians get a refund. See if you can get your bonus sooner, or qualify for a higher amount. If someone owes you money, ask them to pay you back right away. Second, can you come up with any extra cash by selling things? It could be a bike, baking mixer, gaming equipment, a second car, designer bag or stroller. Post whatever you can for sale online (Kijiji, Facebook Marketplace, eBay, your local swap and sell site, etc.). Now is not the time to hold on to 'stuff' just in case you'll need it in the future. The truth is, you need it now. Third, can you trim your spending? Can you cut out all subscriptions and memberships? Can you switch to a low-cost grocery store and achieve a state of zero food waste? Can you completely eliminate all non-essential spending and even not renew leases for rentals or cars? Try all these options. Any extra money you can earn rapidly can be put toward making at least the minimum payments on your credit cards. If there's excess funds, put it on the highest-interest debt. If you can potentially repeat this strategy to raise a bit more money, keep putting a little extra on the highest-interest balance until it's paid off, then move to the next highest-interest balance. This is the avalanche method to reduce debt — it only works if you commit to avoiding any new debt while in the process. They want to get repaid. Thus, many creditors are willing to work with you during this period of financial hardship. When you call them, explain what's happening and explore things like a lower interest rate, waived late and over-limit fees, hardship plans, etc. In your calls with your credit card companies, they may bring up consolidation — or balance transfer — options, and this could be a really helpful solution. If they don't bring it up, ask your primary bank if they offer consolidation loans or look online. By consolidating all the credit card balances (maybe even other personal loans as well) to a lower-rate loan or line of credit, you can bring down the interest costs you pay every month. This also typically results in lower overall payments, and more of your payments can go toward the principal balance rather than interest. Consolidation loans can be tough to qualify for, especially if you've missed payments recently. If you are declined on your first application, take the next six months to make progress on the balances and then try again to qualify for the consolidation loan. Don't keep applying! That's bad for your credit, and won't change the outcome. Only time and progress on the balances will do that. Private consolidations from family are very common right now. If that's an option, make sure you and your loved ones have a solid agreement in place about how repayment will work, over what period of time and the cost, if any. Give these techniques a serious effort for at least 90 days. If you still can't make your minimum payments, get in touch with a licensed insolvency trustee service who can help you explore if a consumer proposal is the right approach for you.
Yahoo
2 days ago
- Business
- Yahoo
Equifax Inc. (NYSE:EFX) Shares Could Be 40% Below Their Intrinsic Value Estimate
The projected fair value for Equifax is US$439 based on 2 Stage Free Cash Flow to Equity Equifax's US$264 share price signals that it might be 40% undervalued Our fair value estimate is 53% higher than Equifax's analyst price target of US$286 How far off is Equifax Inc. (NYSE:EFX) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to their present value. We will use the Discounted Cash Flow (DCF) model on this occasion. It may sound complicated, but actually it is quite simple! Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF ($, Millions) US$956.8m US$1.23b US$1.61b US$1.89b US$2.14b US$2.36b US$2.55b US$2.72b US$2.87b US$3.00b Growth Rate Estimate Source Analyst x6 Analyst x7 Analyst x4 Est @ 17.80% Est @ 13.34% Est @ 10.22% Est @ 8.04% Est @ 6.51% Est @ 5.44% Est @ 4.69% Present Value ($, Millions) Discounted @ 6.9% US$895 US$1.1k US$1.3k US$1.4k US$1.5k US$1.6k US$1.6k US$1.6k US$1.6k US$1.5k ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$14b We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.9%. We discount the terminal cash flows to today's value at a cost of equity of 6.9%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$3.0b× (1 + 2.9%) ÷ (6.9%– 2.9%) = US$78b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$78b÷ ( 1 + 6.9%)10= US$40b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is US$55b. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of US$264, the company appears quite good value at a 40% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Equifax as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.9%, which is based on a levered beta of 0.909. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. Check out our latest analysis for Equifax Strength Earnings growth over the past year exceeded its 5-year average. Debt is well covered by earnings and cashflows. Weakness Earnings growth over the past year underperformed the Professional Services industry. Dividend is low compared to the top 25% of dividend payers in the Professional Services market. Opportunity Annual earnings are forecast to grow faster than the American market. Trading below our estimate of fair value by more than 20%. Threat Revenue is forecast to grow slower than 20% per year. Although the valuation of a company is important, it shouldn't be the only metric you look at when researching a company. It's not possible to obtain a foolproof valuation with a DCF model. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. Can we work out why the company is trading at a discount to intrinsic value? For Equifax, we've put together three relevant items you should look at: Risks: Case in point, we've spotted 1 warning sign for Equifax you should be aware of. Future Earnings: How does EFX's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Toronto Star
2 days ago
- Business
- Toronto Star
This is how to ‘try' not to miss your credit card payments when you're flat out of cash
When you miss payments it's a hit to your credit, but it also means your balance grows — more debt on debt, which is basically compound interest working against you rather than for you. Polling from Equifax shows a staggering number of Canadians have missed credit card payments recently due to the high cost of living, unemployment and an overwhelming amount of pre-existing debt commitments, namely car loans, that were taken out way before all this trade war and tariff business began. And though Canadians appear to be slashing spending left, right and centre, many are still falling behind.
Yahoo
3 days ago
- Business
- Yahoo
Home equity news: Home prices hit another record while HELOC rates fall
HELOCs drop, home equity loans barely budge After rising for the past few weeks, HELOCs dropped to 8.14 percent, still holding close to their lowest level in two years. Meanwhile, the average $30,000 home equity loan inched a tick up to 8.24 percent, according to Bankrate's national survey of lenders. …while mortgage rates stay below 7% The national average for 30-year fixed-rate mortgage inched lower in the most recent week to 6.94 percent, according to Bankrate's latest lender survey. Think your home equity credit line is safe? Think again. Not only is HELOC fraud on the rise, but it's also sneaky and could drain your savings before you even notice. Find out how scammers can steal your money and the simple steps you can take to protect your hard-earned home equity funds. Find out: How to protect yourself from HELOC fraud Fears about an economic downturn might have you thinking about putting homeownership plans on pause. But experts say if you're financially ready and plan to stay put for a few years, it could actually cost you more to wait. Here's why it might make more sense to buy a home now instead of later. Read more: Why recession fears shouldn't derail your homebuying plans Single women buy homes in greater numbers than single men. Yet they derive less wealth from their home, the most significant asset many Americans have. From higher prices to lower sale returns and wage gaps to tougher negotiations, the housing market still stacks the deck unevenly for women. What can be done to even the playing field? Learn more: The housing gender gap Home prices keep climbing to new heights: The latest Case-Shiller index shows a 3.4 percent annual rise in March. But the growth is slowing and has in fact been dropping in the two previous months. Which cities have the hottest and coldest housing markets? Read more: Case-Shiller Index: Home prices push higher, but they're cooling off No doubt about it, it's a frustrating time to be a homebuyer: While home prices keep rising and mortgage payments have doubled since 2020, new homes are the smallest they've been in about a decade. However, experts say holding out for a bigger, 'forever' home might not be the best strategy. Learn why: Bigger isn't always better for homebuyers facing rising costs Have you ever shopped for a HELOC or home equity loan and wondered how the rate you're offered is actually set? It's not just your lender calling the shots. The Federal Reserve's monetary moves, along with your credit profile and home's value also play a significant role. Find out : How are home equity loan rates determined? $13 trillion Mortgage debt, including home equity loans, accounted for $13.09 trillion in consumer debt as of March 2025, a 74 % share of total debt. Source: Equifax Technically, these stories were released in the previous weeks, but they're still worth highlighting. Real estate not only holds value, but it also tends to appreciate over time. For many families, homeownership is often their first, and sometimes their only chance, to build real wealth they can pass down. Here's why having a home can be so important — not just for now, but for the future. Learn more: How a home builds generational wealth Origination fees, appraisal reports and credit report fees are some of the closing costs you may have to pay when taking out a home equity loan or a HELOC. The good news? Overall closing costs are often less than what you would pay with a primary mortgage — and some of them are even negotiable. Read on: How much are home equity loan closing costs in 2025?
