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Mortgage Broker News | 08 Jan 2014, 07:36 AM Agree 0
The governor of the Bank of Canada, Stephen Poloz, suggested Tuesday that the overnight interest rate may soon be raised and he welcomes a strengthening American economy as one of the catalysts for such a maneuver.
  • Paolo Di Petta | | 08 Jan 2014, 10:52 AM Agree 0
    This is a sign of large shortsightedness of the BoC. The fact is, low rates pushed us into this trap.

    Low rates haven't provided sustainable growth and a strong economy, just the illusion of one.

    The common argument is "we can't raise rates because it will kill the economy", but the fact is, Canadians are buried in debt, and can barely extend themselves any further. Low rates have lured Canadians in to debt slavery.

    Salaries have only grown moderately, but debt and expenses have skyrocketed. It's only common sense: if your expenses exceed your income for an sustained period of time, it's going to catch up to you. Eventually, we're going to reach the end of the line
  • Bryan Jaskolka | 09 Jan 2014, 05:55 AM Agree 0
    I think we all know that if Canadians are "lured" into taking on more debt than they can afford, it's no one's fault but their own. The fact is that it's Canadians who got themselves into this hole, not the Finance Minister and not the BoC Governor. I also don't get the argument that "Canadians are buried in debt and can barely extend themselves any further." If they're already so strapped, raising the rates will only hurt them further, and could be the major incident that Poloz is so concerned about.
  • Paolo Di Petta | | 09 Jan 2014, 10:06 AM Agree 0
    So you're going to blame Canadians because they were provided substandard financial education, and then given the keys to the credit candy shop? Your clients must love your opinion of them.

    This is a more systemic issue than most people (including the BoC) are willing to admit.

    The fact is, interest rates were used to manipulate spending in order to stimulate our economy, and we're starting to see how we've sacrificed long term sustainability for short term profit. To act like the BoC/Finance Minster don't use levers like interest and policy to manipulate the economy totally negates your second point about higher rates hurting them further.

    The reality is that this IS the BoC/Finance Minister's fault, because they the ones that got everyone hooked on cheap debt, and have lost control of their levers.

    I've been saying this for close to two years now, rates need to go up. Very slowly and gradually, but there has to be some incentive to start paying down debt instead of piling on more. Until that happens, Canadians are going to keep piling on debt.

    There's a saying "If you keep doing what you're already doing, you're going to keep getting what you're already getting". Even Einstein said "Insanity is doing the same thing over and over again and expecting different results."

    We've had plenty of years to see how low rates and lax policies helped overheat the housing market and throw Canadians into debt - I think it's time for a change.
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