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Debt sidelining homeowner dreams

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Mortgage Broker News | 14 Nov 2012, 10:00 AM Agree 0
A new report detailing a rise in unsecured credit is providing fodder for brokers concerned Ottawa has erred in focusing on mortgages.
  • Paolo Di Petta | dipettamortgage.com | 15 Nov 2012, 05:51 AM Agree 0
    Anyone complaining about the effects of the tightening rule changes is missing the point. Yes, the credit card industry is long overdue for a similar move - I won't disagree, but the bottom line is that people are getting in way over their head on all fronts, be it credit-cards, equity take-outs, and just general spending.

    The fact of the matter is, access to credit nowadays is too cheap and easy and people are spending much more than they need, and worse, much more than they can afford. There's no reason the average debt-to-income ratio should ever be at 164%. Whether it be through credit cards, or constantly refinancing their home in a rapidly appreciating housing market, the problem is really education and self-control.

    Secondly, despite what many mortgage/real estate professionals will say, the rule changes were probably the best thing they could have done. The real estate market (at least here, in Toronto) was completely out of control. Lax rules and low rates have been putting marginal buyers into homes they may not be able to afford in the future. If we would have continued to facilitate that, we would only be prolonging the inevitable (and making it worse in the process).

    If anything, steps should have been taken to cool the market EARLIER - that way, a home would be more affordable (even to the marginal buyers). An ounce of prevention is worth a pound of cure.

  • Nick hamblin | 15 Nov 2012, 06:17 AM Agree 0
    Of course it has the banks say sorry we can only refinance you to 80% LTV but we will provide the balance of the financing required on an unsecured loc or credit card at a much higher rate of interest and they all rub their hands togetherwith glee at the increased profitability that Mr. Flarety has provided them. I wonder which of the big bank's boards Mr. Flarety will sit on an collect a hefty salary for doing so.
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