Happy holidays everyone! Can you believe 2016 is almost over? Where did the time go? With the countdown to New Years on, we thought it would be the perfect time to look back at the past year and look forward to the year to come. Trends to be on the lookout for include a lower loonie, a potential slowdown in the real estate market and better credit card offers.
The Rise of Fintech
Fintech, short for financial technology, made a splash in 2016. Investors moved their money in record numbers from traditional mutual funds to low-cost investments, such as ETFs and index funds. Look for this trend to continue in 2017.
Robo-advising really took off in 2017. (In case you’re not familiar with the term “robo-advisor,” it’s a virtual way to invest that operates over the Internet.) With the assistance of a robo-advisor, you can build your own a customized investment portfolio with handpicked exchanged-traded funds (ETFs) at the fraction of the cost of traditional mutual funds. With CRM2 requiring the clear disclosure of investment fees in simple dollar terms, look for this trend to accelerate in 2017.
As a firm we have partnered with two robo-advisors (Nest Wealth & Wealth Simple) to give you the best of both worlds; low-cost professional money management combined with astute financial planning advice to help you get ahead.
Are you planning to travel south of the border in 2017? You should probably exchange Canadian dollars to U.S. dollar sooner rather than later. It’s predicted that the Canadian dollar could sink to 65 cents in 2017.
The main factor leading to the lower loonie is rising interest rates in the U.S. With the Federal Reserve expected to raise interest rates three times in 2017 in the U.S., this will put downward pressure on the Loonie. With the Canadian dollar so closely tied to the price of oil, look for the Loonie to have an even rougher year if the price of oil falls from its current level.
A Slowdown in Real Estate?
There were several big changes made in the real estate market this year to cool it down and avoid a crash in Toronto and Vancouver. In February, the minimum down payment was upped from five percent to 10 percent for homes over $500,000. An even more significant change was brought in October. Under the new mortgage “stress test,” homebuyers have to qualify at a higher mortgage rate. Although this protects buyers if mortgage rates are a lot higher when their mortgage comes up for renewal, they’ve seen their purchasing power drop by 20 percent.
Will 2017 be another record-breaking year for real estate in the GTA? That remains to be seen. It depends a lot on whether the government brings in anymore significant changes in the real estate market. Higher mortgage rates could also be on the way from a Donald Trump presidency, which could slow down the housing market. Certain lenders like TD Bank have already started raising their rates so there is a possibility that other lenders might follow suit. It might not be a bad idea to start locking in your variable rate mortgage. Let us know if you need any assistance.
Better Credit Card Offers
Are you in the market for a new credit card? Don’t be surprised to see plenty of deals in 2017 from banks look to woo new cardholders. Many people will be looking for new credit cards after the whole Air Miles debacle. If there’s a silver lining to the Air Miles story, it’s that cardholders will have more credit card rights. No longer can credit cards force you to redeem your points within a certain time period thanks to a new government bill coming into effect in Ontario in the new year.
Speaking of credit cards, another trend to watch for is the rise of mobile payments. With the big banks signing on to Apple Pay in 2016, look for wider acceptance of mobile payments in 2017.