Canada’s housing market hot pockets continue to dominate the news cycle (and dinner conversations, no doubt), but March personal finance news was a jumble of moving parts. If you’ve been too busy weeping softly over rising house prices, here are some news stories you may have missed last month:
While rising home prices are nothing new for Toronto homebuyers, the CBC reports two of Canada’s big banks are sounding the alarm on an “unsustainable” market. Then composite benchmark price (comparing “typical” homes in a given area) for a house in the GTA hit $727,300 in February, according to the Toronto Real Estate Board. Within the city itself, a single-family detached home hit an eye-popping $1.1 million. BMO economist Robert Kavcic told the CBC that despite this being the best time within the last 30 years to sell, home seekers are instead enduring the brunt of these rising prices. In addition to the added costs of buying a home and the recent mortgage regulation and insurance changes, even those “in the ‘top one per cent’ of all income earners” can’t afford a property north of $1 million, says BMO chief economist Doug Porter. In a March 16 report, TD warned the “bubble” could batter all of Canada’s economy.
The Bank of Canada announced March 1 it will keep its target overnight lending rate at 0.5% as “significant uncertainties” continue to weigh on the country’s economic outlook. As exports face ongoing challenges with competitiveness, and the bank indicated in January it’s playing the wait-and-see game as to what economic policies will play out under new U.S. President Donald Trump. Even with gains in employment, the central bank noted “significant slack” in the growth of wages and hours compared to our American neighbours. On March 15, the U.S. Federal Reserve raised its target rate by a quarter of a percentage point to a range of 0.75% to 1%, fuelled by an improving labour market and expanding economic activity. The Bank of Canada’s next interest rate announcement is scheduled for April 12, but it’s widely speculated it won’t touch its trendsetting rate until 2018.
There are plenty of options for hotel-like Airbnb rentals in Toronto (and most major cities), but whether or not that’s a good thing depends on who you ask. As the Toronto Star reports, opinions are flaring up as the city prepares begins the public consultation phase of its study on how to regulate short-term rentals. Lisa Marion, who received a $5,000 city grant to start a company that specializes in “Airbnb-style rentals,” told the Star there’s never been an intent to circumvent the rules and that the condo boards need to realize for the most part, there are no problems. Critics like Linda Pinizzotto, president of the Condo Owners Association, told the Star “illegal hotels” not only drive up costs, weaken building safety, and bypass taxes, but they also break bylaws and condo regulations. In a city where apartments are as expensive as the hunt is difficult (read: very), you can expect to hear more from both sides of the debate as the city continues its study.
Following a CBC investigation alleging unscrupulous sales tactics at some of Canada’s major banks, the Financial Consumer Agency of Canada (FCAC) announced it will review the business practices of federally-regulated charter banks. A series of reports by CBC’s Go Public investigative unit aired complaints from former and current employees at major banks who say they face intense pressure to meet sales targets by upselling, tricking, or even lying to customers, sometimes signing them up for products without their consent. After the initial report, Go Public was inundated with nearly 1,000 emails from employees at each of Canada’s Big Five banks claiming similar stories. All of the banks named have since defended themselves in statements to the CBC. In a statement, FCAC commissioner Lucie Tedesco said the agency will investigate “any factors that may be contributing to non-compliance.”
Here’s some good news RateHub heartily supports: the Ontario government announced it’s revamping the province’s high school curriculum to include financial skills, digital literacy, and entrepreneurship. The Toronto Star reports the redesigned Grade 10 careers course is expected to be ready for fall 2018, and will include feedback from students and teachers participating in pilot projects at 28 schools this spring. The move is being applauded by experts, teachers, and students alike, but financial literacy expert Tricia Barry told the Star she thinks financial concepts should be incorporated into lessons by Grade 6. Although Ontario announced in 2011 it would integrate financial literacy into subjects such as math and social studies beginning in Grade 4, a study co-authored by Barry released in 2016 called the result “haphazard, inconsistent” learning.
RateHub hosted a Travel Massive event at our Toronto office on March 30, where members of the local chapter (including bloggers, social media influencers, and travel and tourism reps) mixed, mingled, and learned about how the best travel rewards credit cards can save them money on their travels. Stay tuned for a full recap on the blog this Thursday, including Canadian travel bloggers you should be following.
RateHub CEO Alyssa Furtado is one of the keynote speakers at Canadian Fintech 2.0 Summit 2017, which brings together senior executives from the country’s top fintech companies to muse on the future of financial services. Furtado, who started RateHub at her kitchen table, will appropriately discuss scaling a Canadian fintech company.