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Mortgage Broker News | 12 Sep 2011, 09:00 AM Agree 0
A surprising number of brokers are echoing the sentiments of a leading bank economist, suggesting the government would and should ratchet down mortgage rules yet again – but only if consumer debt levels creep back up and only if they’re phased in.
  • Kevin J. Power, President Power Mortgages Inc. | 13 Sep 2011, 02:43 AM Agree 0
    It is time for the government to look at consumer borrowing in areas other than mortgages. We don't have a mortgage problem in Canada, we have a consumer debt load problem. This is being caused by the banks, credit card companies and other lenders, basing credit on beacon scores or other internal credit approval criteria. Lenders are in the business of building their book of business, so they offer interest only or extremely low payments on secured or unsecured lines of credit. There is no debt retirement programs being built into consumer credit and that is where consumers are getting into trouble. Consumer debt levels is where the real problem is on debt load.
  • Chad | 13 Sep 2011, 02:44 AM Agree 0
    Bluntly put, the real estate industry is an elephant and by proportion, consumer borrowing is a proverbial fly. Complaining that consumer borrowing is the real problem is just passing the buck.”

    I think that it is total bunk! When a client is paying 80% of his mortgage payment for a Car lease, or a 30% HSBC credit card. These monthly payments often far exceed that of the mortgage. Try regulating the Car industry who hide their profits in car loans. Hmm can't have that the unions will get upset due to lower car sales.

  • Debra | 13 Sep 2011, 04:03 AM Agree 0
    I agree they need to figure out a way to control consumer debt load. I think a better approach in the past would have been to add change the TDS/GDS ratios because the client is still putting the same amount out monthly by taking things to the maximum and still the more of less same amount going out each month just they just owe a lesser amounts on their mortgages.
  • Adam Sutton, Centum Pacific Mortgages | 13 Sep 2011, 07:28 AM Agree 0
    It's ludicrous to blame consumer borrowing on the mortgage industry. Canadian borrowers have the lowest default rates in the world. Perhaps if the government took a closer look at revolving credit (ie credit card) rates and started placing limits on that area of borrowing I might be a little less skeptical about all the hype. I mean, really, when is a 29.99% credit card with no real debt discharge date better than a 3-5% refinance?
  • Angela Wong-Liao | 13 Sep 2011, 07:33 AM Agree 0
    I agree with both David and Chad, I believe that both real estate industry and the consumer debt load problem are equally important. In my opinion,our government should tighten up both areas at the same time to regulate and avoid a potential credit bubble. The Canadian economy is quite stable in comparing with America and Europe because we have the best banking system in the world and we are closely regulated by our government.
  • E | 15 Sep 2011, 09:14 AM Agree 0
    I agree with Larock, the last time Canada went into a recession we escaped it because the BOC lowered its rates and created a favorable consumer spending environment resulting in a real estate boom that supported our economy while exports were down…BTW they still are. The BOC can’t pull that magic trick again because banks can’t sustain lower rates, inevitably our safety net is gone and if we dip start dipping back into a recession it puts more Canadians at risk if they continue to buy homes they may not be able to afford in the near future….Be prepared to ask yourselves “Who moved my Cheese?”
  • Greg Williamson | 16 Sep 2011, 03:32 PM Agree 0
    David, I applaud you. Gutsy stance, and I think you are right with respect to the need to be mindful of the long term implications to us of a credit bubble.
  • Michael Cameron | 18 Sep 2011, 12:49 AM Agree 0
    I don't think tightening mortgage rules is the answer. Lets look at where this came from in the first place. Anyone remember October 2006? We had the introduction of 40 year ams, higher GDS/TDS ratios.

    This is what allowed/caused the market to soar. So now we come in and say "oops we never should have let that happen"? So now you are penalizing everyone who purchased a home between 2006 and now? I don't think government intervention, that is based on politics, not necessarily facts, is prudent.

    Lenders and insurers have tightened the reigns over the last few years. To echo the sentiments of some of the other comments, lets focus on the real debt issues like vehicle loans and credit cards. Come to Alberta and I will show you many individuals driving around in $70,000 trucks who cannot qualify for a mortgage.

    Home ownership creates community stability, a sense of pride and a number of other intangibles. Lets not take that away based on the political need to be seen to "do something". Address the real problems first.
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