RateHub Roundup: January 2015

by Cait Flanders January 5, 2015 / No Comments

Oh, hey there – and Happy New Year! If you were expecting to see our usual Monthly Mortgage Update today, I’m sad to tell you that December’s was our last. After five years of building the top-ranked mortgage comparison website in Canada, we finally (and very quietly) launched a new vertical last month: credit cards. (If you haven’t taken a peek at it yet, you’ll want to after this!)

Just because we’re no longer a mortgage-only site, though, that doesn’t mean we’ll stop sharing the mortgage news that matters most to you; it simply means we now get to include other personal finance stories in our monthly updates. KL has also passed the torch over to me, which makes all my dorky personal finance blogger dreams come true. Here’s hoping I can fill in her shoes!

At the beginning of each month, I’m going to look back at all the mortgage, real estate and credit card stories that made headlines in weeks prior. When we launch into more verticals, you’ll see those topics added, as well. As 2014 wrapped up, most of the stories we found were a reflection of what happened last year, with a few predictions for what’s to come in 2015. Take a look…

Can You Afford to Buy?

In light of the news that our housing market is overvalued by 10-30%, Rob Carrick of The Globe and Mail advised Canadians to finally get serious about real estate. “Houses are financial assets, just like stocks, gold bars and gallons of oil, which is to say prices move both up and down. In the stock market, the way to protect yourself from the risk of big declines is to commit to a holding period of 10 years or more.” And, according to Carrick, the same should be true for homes. As a nation, housing prices are expected to rise steadily in 2015. Some markets may fall flat, but Vancouver, Calgary and Toronto are looking at price increases of at least 3-4%; this is not an insignificant detail, especially if there’s concern that a shock to the economy could result in a significant decrease in property values. Knowing that the threat of further increased prices could push more young, first-time homebuyers to get into the market, Carrick wrote a follow-up article directed at them. In it, he included five tips – all of which we agree with, but especially #1 and #3: don’t spend the maximum amount a bank or mortgage broker pre-approves you for, and make sure you leave room in your budget to save at least 10% as a homeowner. If you can’t do that, it may not be the right time to buy.

What Can Mortgage Shoppers Expect in 2015?

With all of that in mind, the other thing to consider before purchasing a home in 2015 is, of course, how your mortgage will fit into the equation. Rob McLister wrote a great piece for The Globe and Mail, where he listed his five predictions for how the Canadian mortgage market might change this year. First, if our housing market is truly overvalued, he says we shouldn’t be surprised if mortgage rules are tightened yet again. Over the years, the federal government has taken a number of steps to make qualifying for a mortgage more difficult (such as increasing the minimum down payment from 0% to 5% and decreasing the max. amortization from 40 years down to just 25), so Canadians wouldn’t take on more household debt than they could afford to repay, especially if mortgage rates go up. McLister predicts either new limits will be set for government-backed mortgages, or new underwriting rules will be written; maybe both. None of this is confirmed, but you should be aware that lending rules may change in 2015. Click on the link to read his other predictions.

Canadian Convicted in Major Credit Card Scheme Ordered to Repay $1.5 Million

We’re still waiting for April 2015 to roll around – that’s when Canada’s two biggest credit card companies are scheduled to reduce the fees they charge merchants who accept Visa and MasterCard as a form of payment from customers. Since we can’t talk about how that affects (or doesn’t affect) small businesses yet, here’s an update on one of the most elaborate credit card fraud schemes in North American history. After eight years of investigation, Toronto’s Adekunle Adetiloye was finally charged with fraud in February 2011, after stealing more than 38,000 identities from U.S. citizens. Since then, the government has gone through all known records, to try and calculate how much each victim was owed, and the final number is out: $1.5 million.

Adetiloye’s scheme involved incorporating two companies, calling credit cardholders and pretending to be debt collection agencies. If you have credit card debt looming over you, this type of call may seem normal, but you can never be too careful. Credit card fraud is alive and thriving, even up here in Canada. Two men from Saskatoon were recently arrested for skimming credit cards. Just last week, Canadian Tire confirmed there was a new telephone scam being conducted in Canada, which claims you get a free trip from Canadian Tire if you hand over your credit card information. And both Home Depot and Target experienced credit card data breaches last year. For extra reading, Yahoo! Finance Canada published a list of steps you should take if your credit card is hacked.

Hope you enjoyed our first RateHub Roundup of 2015! For more personal finance stories + fun facts, you can find us on Facebook, Twitter and Google+.

Until next month!