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Originally Posted by photon
I assume the concern would be that people are paying interest only and thereby are never paying down their houses. Though going from 80% to 65% doesn't fix that, it just reduces the bank's risk if the borrower defaults I guess.
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They should focus on credit cards that remain at their full balance. Maybe start to make credit cards amortize. That would rein in stupid consumer debt/spending.
Quote:
Originally Posted by darklord 700
This is the right move. BOC can't jake interest rate up too much or everyone will be in trouble. To reign in real estate prices, they can cap HELOC at a lower LTV rate, thus, eliminating certain people using their house as an ATM.
Still at 54%, that's pretty high.
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HELOC's aren't fueling real estate prices. If real estate prices are indeed being fueled it's the 95% LTV, low interest rates and lax qualification standards.
Giving someone a HELOC up to 80% on its own or combined with a conventional mortgage isn't encouraging the market to go nuts.
The guy with 80% debt on his house concerns me much less than the guy with 95% and $30k in credit card debt and $50k in a personal line of credit.
Limit amortizations on personal lines of credit to 7.5 years. No interest only payments. Do the same for credit cards. Increase tighter approval limits for credit cards. Do away with the 1.99% cheques the credit card companies issue so that you can spend more at Christmas/mothers day/easter/summer vacation etc.