RateHub Roundup: January 2017

by Jordan Lavin January 2, 2017 / No Comments

Happy new year! While you’re looking ahead to the opportunities this year may bring, why not take a moment to reflect back on some of the stories you might have missed over the past month? Across all aspects of personal finance – from mortgages to credit cards, and insurance – here are the stories you might have missed in December:

How long does it take to save for a down payment?

According to Mortgage Professionals Canada, it will now take the average Canadian twice as long to save up a 20% down payment as it would have just fifteen years ago. Recent increases in house prices are to blame, coupled with non-increases in salaries. A person with an average income would need to save every penny for 102 weeks to get to 20% of the average home price. That 20% mark is getting more important too, as it’s now harder to qualify for a mortgage with a smaller down payment, and the cost of CMHC insurance eroding equity for those with the highest ratio mortgages. RateHub’s Digital Money Trends report found that first-time home buyers are saving aggressively to build up a down payment. A staggering 42% of people are saving at least a quarter of their income to buy their first home, and 18% are saving half or more. On top of that, 44% of millennials will get help from family to buy their first home. And that’s not counting the thousands of rent-free bedrooms that are allowing so many young people to save such a large portion of their incomes.

Are you doing enough to meet your financial goals?

New research from CIBC shows half of Canadians aren’t doing enough to stay on top of their financial goals. Forty-eight percent said they would not stop spending money on luxuries to pay for goals like paying off debt, saving more money, and keeping up with bills. Meanwhile, 28% said they incurred new debt last year simply because they spent more money than they earned on day-to-day expenses. Finding money to build up your high interest savings account isn’t always easy, especially when it comes to long-term savings goals. For example, RateHub’s Digital Money Trends Report shows that 65% of generation Xers aren’t confident they’ll have enough money to retire. Whatever your financial new year’s resolutions are, it’s going to take some grit and sacrifice to keep them.

How to get the most out of travel in 2017

If you travel a lot for business or pleasure, you could be missing out on some big opportunities to save money. Paying cash for last-minute flights, travelling at peak times, and even paying foreign exchange fees on your credit cards can eat up a lot of cash unnecessarily. So what can you do to lower your costs? Besides looking for the best travel rewards credit card, you can use points to save on travel during peak periods, find rewards programs that pay for perks, and make better decisions on negotiable items like airport transfers.

Who pays when your stolen car is found?

A BC man is on the hook for recovering his pickup truck, which was stolen in May. Will Iblings from Kamloops reported his 1996 GMC truck stolen months ago. But in December, he was surprised to get a call from a towing company that had found his truck at the bottom of a ravine, hundreds of kilometres away from his home. Because Iblings hadn’t purchased comprehensive insurance – which would have covered the theft – he was given a bill for over $2,000 for recovering the vehicle. So how can you avoid getting a similar bill if your vehicle is stolen? Buying comprehensive coverage is on the list, but even for Iblings, the cost of premiums and the deductible would probably have cost more than the towing charge. Take the time to understand your policy and comparing car insurance quotes to make sure you have the right coverage. And if you decide not to purchase certain coverage, know that you’re taking a calculated risk and there’s a chance you could come out on the losing side.

Free money for BC first-time homebuyers

As the Federal government works furiously to reduce mortgage affordability by raising qualification standards and introducing rules that are pushing mortgage rates higher, the provincial government of British Columbia is shovelling cash into the pockets of first-time homebuyers. Christy Clark’s provincial government announced last month that interest-free loans of up to $37,500 will be made available to first-time homebuyers in the province. To get the loan, you’ll have to have lived in BC for a full year, have a household income under $150,000, buy a qualifying home for $750,000 or less, and have at least half of the minimum down payment. You’ll also have to repay the loan starting 5 years after your purchase, at the prime rate plus ½ percent. (Based on today’s prime rate, the interest rate would be 3.20%, about a full percentage point higher than the bets 5-year variable mortgage rates). The scheme has been panned by critics and called out as a gambit to buy votes ahead of this May’s election. For first-time homebuyers, it could be a cause of long-term pain in exchange for short-term gain.

RateHub Updates

The 2016 RateHub Digital Money Trends Report was released this month. The report takes an in-depth look at how Canadians are using financial technology (fintech) to manage their money. Check out our roundups of what we learned on the blog, or read the full report here.

Congratulations to RateHub CEO and co-founder Alyssa Furtado, who is a finalist for the 2016 RBC Canadian Women Entrepreneur Awards. Alyssa and the other finalists were asked for their advice to other entrepreneurs. See what she had so say here.

What technologies will change the way you manage your finances in 2017? Our chief marketing officer Kerri-Lynn McAllister talked to four fintech company founders to get their predictions.

Want free stuff? How about a free $75 gift card when you sign up for select Scotiabank credit cards? Or a chance to win a $50 Petro-Canada gift card when you sign up for your newsletter?

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