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Mortgage Broker News | 28 Aug 2013, 12:00 AM Agree 0
New Equifax data suggests that mortgage debt has eclipsed credit cards as the number one driver of household debt.
  • Layth Matthews | 28 Aug 2013, 10:31 AM Agree 0
    I'm not sure how you get 7.4% increase out of $168,387 over $162,985. I get 3.3% growth there.
    Nevertheless, if we could just swap all other forms of debt for mortgage debt, there would be dancing in the streets. It is cheaper, as mentioned, and it is also secured term debt which is psychologically much less stressful vs. unsecured revolving credit, which amounts to a tax on the soul.
    The only problem with consolidating habitually is that it can result in financing short-term assets over 25 years. So apart from actually developing savings discipline which would cure the whole thing, (impossible!) one could just refinance away but try to keep the amortization marching down.
  • Lior, Mortgage Edge | 28 Aug 2013, 10:48 AM Agree 0
    "Still, access to refis for consolidation has virtually dried up, complain some brokers, pointing to the LTV ceiling of 80 per cent introduced last year."

    That's not necessarily an issue. Even if you use a second mortgage as a top up on the 80% it may still make sense to consolidate high credit card balances. Department store cards are the worst because they carry a rate of nearly 30%.
  • Okanagan Broker | 28 Aug 2013, 12:12 PM Agree 0
    All great comments...Mortgage debt is basically good, comsumer debt is basically bad...and as Layth says the only risk, that we all hopefully discuss with our clients when refinancing, is amortizing short term stuff over 25 years...I would love to see some serious Gov't regulation on consumer credit granting and then a return to higher home refinancing ratios...
  • Paolo Di Petta | | 28 Aug 2013, 01:10 PM Agree 0
    I think we're sort of missing the point when looking at just the stats and not the context.

    In many cases, mortgage debt is rising because credit card debt is being refinanced into a mortgage - so it's only logical that mortgage debt is "going up" and credit card debt is "going down"

    Realizing that renders those stats useless on their own.

    There's a bunch of other more useful stats (like debt-to-income, consumer spending vs. avg income, avg income vs. avg home price, etc.) which all provide a better picture of how income, credit and spending affects the economy.
  • Okanagan Broker | 28 Aug 2013, 01:23 PM Agree 0
    I agree with Paulo that stats are only part of the story...but would suggest that with our new 80% LTVR refiance restrictions, and homeowners with reduced equity due to reduced housing values...lenders/brokers are likely NOT refiancing anywhere near the consumer debt into mortgage debt as compared to previous years...I know I'm not...
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