R E S P E C T.
Canadians should be respected by the BOC and our governments. It was according to their plan that Canadians stepped up, bought vehicles, houses, furniture, appliances in the midst of a recession. It was the intention of the BOC to create liquidity, so they dropped the prime. Banks were flooded with cash, so they encouraged debt in various ways, sometimes lowering the criteria, the down payment, and increasing the amortization period.
Canadians weren't stupid. They rearranged mortgages so debts from 10-30% could be re-consolidated, which saved enough money they could continue to step up throughout the recession. This was one of the keys to Canada's recovery. What differs between the US and Canada was predatory lending: In the US, mortgage companies intentionally qualified people that, odds were, going to be paying far far higher payments simply related to their likelihood of being unable to pay--therefore requiring them to pay higher penalty interest rates. Canadian mortgage companies and banks were never about that so far--which saved us from collapse. Because our home prices were never depressed by a huge repo market, we were able to retain equity in our homes: a vast pool of wealth--which disappeared in the US. Trillions of dollars of wealth evaporated with that melt-down. We would be foolish to think it cannot happen here. We need to pay attention. By keeping the rates low, banks make money and Canadians can save it--just raise the criterion for lending.
The real villains are the credit card companies, quick-loan outlets, payday loan companies etc. These prey on the weak, and the poor with unprecedented spreads some over 30% above prime. They prey on people who have been put out of work, or in poverty, and gouge them for all they are worth. In a sense, if mortgage companies can relieve that atrocity somewhat, by allowing consumers to re-fi, they have done themselves a big favor. If we want to pay down net debt, no financing vehicle should be able to charge more than 5% over prime. If that means CC companies etc. have to tighten their criteria that would be a good thing to drive down net debt. Customers will have more money to retire their debt.
But the biggest villain however, will be Mark Carney--if he now treats consumers with disrespect. Instead of recognizing Canadian heroism, for stepping up. If he ratchets up rates and starts the process of gouging those who can least afford it and those who saved his bacon and those who will have to dump their houses on the market--or lose them. That's when the real "Carn" age begins
Read more: http://www.cbc.ca/canada/story/2010/12/13/carney-interest-rates-warning.html#socialcomments#ixzz182BkAzhu
Canadians should be respected by the BOC and our governments. It was according to their plan that Canadians stepped up, bought vehicles, houses, furniture, appliances in the midst of a recession. It was the intention of the BOC to create liquidity, so they dropped the prime. Banks were flooded with cash, so they encouraged debt in various ways, sometimes lowering the criteria, the down payment, and increasing the amortization period.
Canadians weren't stupid. They rearranged mortgages so debts from 10-30% could be re-consolidated, which saved enough money they could continue to step up throughout the recession. This was one of the keys to Canada's recovery. What differs between the US and Canada was predatory lending: In the US, mortgage companies intentionally qualified people that, odds were, going to be paying far far higher payments simply related to their likelihood of being unable to pay--therefore requiring them to pay higher penalty interest rates. Canadian mortgage companies and banks were never about that so far--which saved us from collapse. Because our home prices were never depressed by a huge repo market, we were able to retain equity in our homes: a vast pool of wealth--which disappeared in the US. Trillions of dollars of wealth evaporated with that melt-down. We would be foolish to think it cannot happen here. We need to pay attention. By keeping the rates low, banks make money and Canadians can save it--just raise the criterion for lending.
The real villains are the credit card companies, quick-loan outlets, payday loan companies etc. These prey on the weak, and the poor with unprecedented spreads some over 30% above prime. They prey on people who have been put out of work, or in poverty, and gouge them for all they are worth. In a sense, if mortgage companies can relieve that atrocity somewhat, by allowing consumers to re-fi, they have done themselves a big favor. If we want to pay down net debt, no financing vehicle should be able to charge more than 5% over prime. If that means CC companies etc. have to tighten their criteria that would be a good thing to drive down net debt. Customers will have more money to retire their debt.
But the biggest villain however, will be Mark Carney--if he now treats consumers with disrespect. Instead of recognizing Canadian heroism, for stepping up. If he ratchets up rates and starts the process of gouging those who can least afford it and those who saved his bacon and those who will have to dump their houses on the market--or lose them. That's when the real "Carn" age begins
Read more: http://www.cbc.ca/canada/story/2010/12/13/carney-interest-rates-warning.html#socialcomments#ixzz182BkAzhu
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