Even with the Bank of Canada standing pat on hikes (for now), it’s all about interest rates this month as consumers anticipate the next turn of the screw on higher borrowing costs. Here are some personal finance headlines you might have missed last month.
Canada’s central bank most recently held its trendsetting interest rate at 1.25%, but rates will continue to rise — as of May 1, three of the big banks already hiked rates on some mortgages. With half of all existing mortgages in Canada up for renewal in 2018, should borrowers convert their variable rate mortgage to a fixed rate, or head off rising rates by renewing their mortgage early? Global News has a thorough explainer on the nuts and bolts of fixed vs. variable rate mortgages in the context of rising interest rates.
Albertans racked up “significant debt” in the economic boom before the 2014 oil price collapse, and have the highest share of two-year mortgage terms in Canada — as interest rates rise, that’s a one-two punch for financial strain, according to a report from RBC. Even with ridiculously expensive home prices in Ontario and British Columbia, the report predicts Alberta will be the province hit hardest by future Bank of Canada interest rate increases — a hike of 1 percentage point “would add $1,200 in annual debt-service costs to the average Alberta household,” according to RBC senior economist Robert Hogue.
Amazingly, companies currently have zero obligation to tell Canadians if their personal information is compromised in a breach. But as of Nov. 1, companies will be legally required to inform both Canadian consumers and the federal privacy commissioner when a breach occurs if it poses certain risks, including (but not limited to) financial loss, identity theft, loss of employment, bodily harm, or damage to reputation — and must do so in a timely manner. Global News reports legislation was actually passed in 2015, but recent high-profile breaches at companies such as Uber and Hudson’s Bay Co. may have spurred the government to finally implement it.
Yearly reminder from the fun police: a tax refund isn’t found money, and you probably shouldn’t blow it on hockey tickets, a weekend getaway, or a pricey meal. But is it better to pay off existing debt, or invest the money? “It’s about really developing a plan to preserve and accumulate wealth and that’s going to vary from person to person,” Andy Nasr of Scotia Wealth Management tells The Canadian Press.
An investigation by the Financial Consumer Agency of Canada (FCAC) did not find widespread upselling to customers to meet aggressive sales targets at Canada’s big banks, but one financial adviser tells CBC the pressure is only getting worse. Following a series of investigations by CBC Go Public last year that alleged employees of all five big banks felt “pressured to upsell, trick and even lie to customers to meet unrealistic sales targets and keep their jobs,” FCAC opened a nine-month review into domestic banks’ retail sales practices. Although the regulator found “bank cultures strongly anchored in sales can increase the risk of misselling and breaching market conduct obligations,” it didn’t find “widespread misselling.”
Ratehub.ca is among five startups recently accepted into OneEleven’s insurtech growth program, hosted in partnership with Aviva Canada. The four-month program includes “one-on-one mentoring sessions with Aviva Canada, pitch feedback from OneEleven community experts, and expertise in the market.”
CanWise Financial, owned by Ratehub Inc., took home Mortgage Brokerage of the Year at the Canadian Mortgage Awards, which recognizes “oustanding successes in leadership, service, innovation, support, and principle” in the industry.