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Mortgage Broker News | 18 Feb 2011, 09:35 AM Agree 0
With a surprise drop in credit card debt over the holiday shopping season, lines of credit increased. Merix Financial speculates whether this could push banks to raise HELOC interest rates.
  • DanP | 23 Feb 2011, 11:59 PM Agree 0
    Consumer reduction of (high cost) credit card use seems to indicate the public is getting the message that debt loads should be reduced. Part of that strategy incompases moving high cost debt to lower cost alternatives. Having the banking industry increase LOC rates to "shore-up" their dwindeling coffers (due to reduced c.c. use) is just wrong and goes against the direction the Feds want to see the Canadian Consumer go in. Now would be a good time for the Feds to tighten some bank regulation screws in favour of the Canadadian consumer.
  • padarzoli | 25 Feb 2011, 04:34 AM Agree 0
    Well said DanP, the only problem is this, more profit the banks are making, the more tax they pay. Our tax-dependent government can not get enough in, they will not oppose to banks to charge on HELOC as much as they want. The contrast is where the problem lies, with credit cards too high and HELOCs too low. Finding a balance though only will make people borrow more. Self control is the answer. The main problem is, reckless individuals are setting the rate for the responsible others, as somebody must pay, nothing is free.
  • Vancouver Broker | 04 Mar 2011, 11:51 AM Agree 0
    Somebody must pay? Padarzoli, I disagree with you. The government will get their tax revenue one way or another, but it doesn't need to force consumers to subsidize already-massively-profitable banks.

    The traditional argument for pricing of debt products isnt related to the lenders need for profit, or the governments need for tax revenue - its been based on the RISK of DEFAULT that the debt product represents. If highly qualified borrowers elect to move out of credit cards in to lines of credit, you might need to see an increase in the price of credit cards to compensate for the increased portfolio risk (i.e. good borrowers out of the picture, leaving less good borrowers paying (or not) the credit card debt).

    Any excuse the big banks give to justify raising prices is just an excuse. Call a cash grab a cash grab.

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