Flaherty influcencing financial lenders/markets.

[Boges]

If the feds are so worried about consumers debt than why haven't they done more for the credit card rates? I would think more people have credit cards than mortgages, and I would like to see a lowering of the rates for at least five years. I, also, thinkt the banks wouldn't allow a person to get a mortgage without knowing for sure they can handle one. There was a time, when the bank send everyone a form to fill out for a credit card in their mail.

Because only a certifiable idiot keeps a balance on their Credit Card.

[GostHacked]

Lowering credit card interest will just encourage people to pile on even more debt. Anybody that carries credit card interest is an idiot. I don't agree with Flaherty discouraging low mortgage rates, just do what he's already done - tighten up requirements to get that mortgage. If the bank thinks it can make money on a low rate, no harm done as long as the borrowers are solid. I'm sure to get this rate you would have had to make a substantial downpayment.

I can agree with this line of thinking. The bank is taking less of a risk loaning the money if the buyer is in a good financial situation. The profit growth may not rise as quick because of the lower but more reliable returns, but it will build a more solid foundation for the bank too if it does not get involved with a good deal of the high risk investment areas and high risk customers.

Banks will always take part in high risk investments, because the payout can be good, but at a much greater risk of losing it all and then some.

I would go with your last line and tie that low interest rate with a good down payment. Help those who are smart with their money and build a good relationship with them.

[guyser]

An alternative for the government is to direct CMHC to refuse to insure mortgages where the interest rate is unrealistically low for fear that when it shoots up the owners will not be able to pay and stick CMHC with the cost. BMO can lower its rates as low as it wants to then, and if the homeowner can't pay then BMO can recover what it can on its own.

Sure sounds like a reasonable start.

[shortlived]

If the feds are so worried about consumers debt than why haven't they done more for the credit card rates? I would think more people have credit cards than mortgages, and I would like to see a lowering of the rates for at least five years. I, also, thinkt the banks wouldn't allow a person to get a mortgage without knowing for sure they can handle one. There was a time, when the bank send everyone a form to fill out for a credit card in their mail.

Because the prime rate is going to go up thats why, and Flaherty wanted to drop some insider trader info to save his buddies at Manulife the problem of being caught in an prime rate bubble, no?

The next scheduled interest rate announcement is April 17, 2013.

Edited March 20, 2013 by shortlived

[Boges]

Because the prime rate is going to go up thats why, and Flaherty wanted to drop some insider trader info to save his buddies at Manulife the problem of being caught in an prime rate bubble, no?

The next scheduled interest rate announcement is April 17, 2013.

There's no evidence the prime rate will go up any time this year.

[shortlived]

There's no evidence the prime rate will go up any time this year.

Oh if it were to I bet there is evidence.

What is obvious though is that 2.83% is not 3% which is the "line" that all the major banks are holding for PRIME (for their 2% gain that can meet with inflation and eek out a profit)

Manulife undercut prime, its clear the government is trying to say how financial institutions should do business. Plain and simple socialism and indirect nationalization of the finance sector to the command economy dictates of the federal government, who would have thought the Conservative Party has a fascist Progrom, on the not so free market financial sector.

Heir Flaherty seems to be ruling with an Iron fist where a mere evil eye evokes fear in this subject brokerages.

Edited March 21, 2013 by shortlived

[Moonbox]

Flaherty grossly overstepped his bounds here. It's the Bank of Canada's mandate to control rates and monetary policy. The Finance Minister's job is fiscal policy. The two are seperate for a reason and Flaherty knows this. I have no idea why he is trying to play around with the markets like this, especially considering he tried to do the same thing with BMO earlier and they summarily ignored him.

[shortlived]

Flaherty grossly overstepped his bounds here. It's the Bank of Canada's mandate to control rates and monetary policy. The Finance Minister's job is fiscal policy. The two are seperate for a reason and Flaherty knows this. I have no idea why he is trying to play around with the markets like this, especially considering he tried to do the same thing with BMO earlier and they summarily ignored him.

Was that before or after BMO's computer system atms and accounts were hacked?

[The_Squid]

An alternative for the government is to direct CMHC to refuse to insure mortgages where the interest rate is unrealistically low for fear that when it shoots up the owners will not be able to pay and stick CMHC with the cost. BMO can lower its rates as low as it wants to then, and if the homeowner can't pay then BMO can recover what it can on its own.

What if the mortgage is a reasonable one? Why should an individual be punished for their good fiscal sense in getting a reasonable mortgage at the lowest rate possible?

[Canuckistani]

Just make sure the buyer puts up a hefty down payment and it's all good. In fact I doubt if they're givign these mortgages to people getting in by the skin of their teeth anyway.

[TimG]

What if the mortgage is a reasonable one? Why should an individual be punished for their good fiscal sense in getting a reasonable mortgage at the lowest rate possible?

If governments don't manage macro-economic policy then the BOC will eventually be forced to raise rates. A lot of the pain we experienced over the last 5 years is entirely because governments failed to restrain mortgage borrowing. The change of attitude is welcome. Edited March 21, 2013 by TimG

[GostHacked]

Just make sure the buyer puts up a hefty down payment and it's all good. In fact I doubt if they're givign these mortgages to people getting in by the skin of their teeth anyway.

I never quite understood the zero down when buying a house. People with no excess cash flow that cannot save up for a downpayment would be considered a higher risk of defaulting on the mortgage.

I am in the market for a house now and have managed to save up a good chunk of change. The only difference with me is no significant other or dependents (children) allowing me to bank all that money without issue. I do understand that with a family the cost of raising a family will be large. But there are areas where money can be cut in order to allow savings to accumulate in their account.

Do people need a house/home to live in? Yes indeed. Do they need that new car when they already have 1 and in most cases 2 working vehicles? People do need to look at their own finances in order to make good decisions, but I guess we don't have a lot of people that are smart with their finances.

[WWWTT]

Are you kidding? This is a move to protect consumers, from themselves if nobody else.

Wouldn't think that if you still knew who cut the GST to 5% from 7%.

WWWTT

[WWWTT]

Just make sure the buyer puts up a hefty down payment and it's all good. In fact I doubt if they're givign these mortgages to people getting in by the skin of their teeth anyway.

Yep,that's why Flaherty is just blowing hot wind again.

WWWTT

[WWWTT]

What if the mortgage is a reasonable one? Why should an individual be punished for their good fiscal sense in getting a reasonable mortgage at the lowest rate possible?

Because the conservatives want the banks to profit at the consumers expence!

And give them a corporate tax cut at the same time!

WWWTT

[TimG]

I never quite understood the zero down when buying a house. People with no excess cash flow that cannot save up for a downpayment would be considered a higher risk of defaulting on the mortgage.

A home is a unique purchase because if you don't have one then a big chunk of your income is going to rent. If the cost of rent is comparable to the cost of a mortgage then someone may have no problems affording the mortgage but not have enough excess cash flow to build up a 20K or more downpayment.

[GostHacked]

A home is a unique purchase because if you don't have one then a big chunk of your income is going to rent. If the cost of rent is comparable to the cost of a mortgage then someone may have no problems affording the mortgage but not have enough excess cash flow to build up a 20K or more downpayment.

Yes but we are told to have some savings for a rainy day. Job loss, death of a spouse, emergency repairs, ect. Living paycheck to paycheck is quite dangerous.

My sister owns 2 houses (one she lives in the other she rents out) and also is part owner of a 5 unit building (rent) but still has some cash flow problems as she is self employed. I have had to help her out a couple times, as she can't seem to save up. However things are starting to turn for her and she is now able to start banking some money.

[Moonbox]

Realistically, someone who can afford only their rent payment and not any savings whatsoever is already in a precarious situation. If there are any shocks to their income or expenses, (ie. a diability, layoff, car repair), then they're in trouble. The person would need to start borrowing to make up the short fall, usually on credit cards, and if they're living paycheque to paycheque with their existing expenses, how are they going to afford the payments on their borrowing?

Rent is the only option that should be available to them, not only because there are all sorts of protections avaiable to renters vs landlords (you have to be pretty late to get evicted) but nobody is really out a lot of money if rent payments are missed. If a mortgage defaults, a BEST case scenario would probably be tens of thousands of dollars in losses for CMHC/Genworth. The actuaries run these numbers, as does the government, and they can see that the reliability and rate of default for these people suggest they're terrible candidates for mortgages.

[TimG]

Yes but we are told to have some savings for a rainy day. Job loss, death of a spouse, emergency repairs, ect. Living paycheck to paycheck is quite dangerous.

And how does the situation change if one is doing this by paying rent rather than a mortgage? At least with the mortgage you are building up home equity over time.

[TimG]

Rent is the only option that should be available to them, not only because there are all sorts of protections avaiable to renters vs landlords (you have to be pretty late to get evicted) but nobody is really out a lot of money if rent payments are missed.

I take issue with that: the landlord is carrying a mortgage and could have serious cash flow problems if tenets are late. An argument that government should not support home ownership because government support for renters pushes the risk from the renter to the landlords is nonsensical. If governments stop supporting home ownership they should also stop coddling renters. Edited March 21, 2013 by TimG

[shortlived]

If governments don't manage macro-economic policy then the BOC will eventually be forced to raise rates. A lot of the pain we experienced over the last 5 years is entirely because governments failed to restrain mortgage borrowing. The change of attitude is welcome.

What are you talking about there was a definate attempt to stem off mortgage borrowing.

Edited March 21, 2013 by shortlived

[shortlived]

Yes but we are told to have some savings for a rainy day. Job loss, death of a spouse, emergency repairs, ect. Living paycheck to paycheck is quite dangerous.

My sister owns 2 houses (one she lives in the other she rents out) and also is part owner of a 5 unit building (rent) but still has some cash flow problems as she is self employed. I have had to help her out a couple times, as she can't seem to save up. However things are starting to turn for her and she is now able to start banking some money.

So is living paycheck to paycheck without a house to sell/get sold. Atleast you have the capital investment if you are renting to own as opposed to renting.

People really should start with a low costing house though, this pretty much means moving outside the city in urban centers, and building your own via groups like habitat for humanity, but people who can be anywhere, there are houses for $25,000 and less available.

see: http://www.habitat.ca/

The mortgage issue is two fold. 1. not enough public land for social housing. 2. not enough government investment into social housing. 3. people not willing to live in social housing over owning their own properties.

I think though that the government should just let private business operate. If banks fail they fail. It is the free market. The strong and prudent will survive. It is basically the public sector saying how the private sector should behave, that is command economics, a puppet show.

Edited March 21, 2013 by shortlived

[RNG]

So is living paycheck to paycheck without a house to sell/get sold. Atleast you have the capital investment if you are renting to own as opposed to renting.

People really should start with a low costing house though, this pretty much means moving outside the city in urban centers, and building your own via groups like habitat for humanity, but people who can be anywhere, there are houses for $25,000 and less available.

see: http://www.habitat.ca/

The mortgage issue is two fold. 1. not enough public land for social housing. 2. not enough government investment into social housing. 3. people not willing to live in social housing over owning their own properties.

I think though that the government should just let private business operate. If banks fail they fail. It is the free market. The strong and prudent will survive. It is basically the public sector saying how the private sector should behave, that is command economics, a puppet show.

My life experience suggests to me that if you are a fan of government "investing" in social housing you will be the first to demand the government bail out the banks and the individuals who overextend themselves for fear that they might actually have to live with the logical consequences of their actions.

[shortlived]

My life experience suggests to me that if you are a fan of government "investing" in social housing you will be the first to demand the government bail out the banks and the individuals who overextend themselves for fear that they might actually have to live with the logical consequences of their actions.

If landlords can make money off of it so can the government. If government was atleast capable, fiscally which it clearly isn't.

But no, no private business deserves credits or a bail out.

They don't deserve to be taxed either, but they should have fees for specific business services, such as licensing, or leasing crown lands.

Edited March 21, 2013 by shortlived

[TimG]

If landlords can make money off of it so can the government.

The reason people demand 'social housing' is because they do not want to pay the rents required in order to allow a private landlord to make a profit. So it is absurd to suggest the government could make money.

The main issue with social housing is the demand is unbounded because everyone wants cheap housing. This means the government cannot possibly provide it to everyone who thinks they deserve it. This means we will always be in a state where activists whine about the lack of social housing and the government does nothing of substance.

Edited March 22, 2013 by TimG