No more 30 Year Amortizations in Canada

[automaton 3]

Originally Posted by onetwo_threefour

Anybody recall that BMO is currently suing 200+ people in one giant mortgage fraud lawsuit? Those defendants are lawyers, mortgage brokers, realtors, and buyers that thought they could play the system or bend the rules a bit. (Admittedly there are a bunch of bogus allegations against lwayers in terms of what they did or didn't do to protect the lender as well IMO, but that's beside the point)

1234...your comments in this thread are bang on and I agree.

Just thought I'd point out that if the allegations are true in that BMO lawsuit, some of the defendants were more than bending the rules...outright subversion might be more accurate.

[darklord700]

Originally Posted by automaton 3

Just thought I'd point out that if the allegations are true in that BMO lawsuit, some of the defendants were more than bending the rules...outright subversion might be more accurate.

A few years ago, I've been approached by a friend's friend who's in the real estate industry. He proposed a deal to me to have my name on the mortgage and then he'll pay me some money for the effort. Can't remember the amount but it's like couple thousands a year. I asked who will pay for the mortgage, he said some investors or tenants will.

Of course, I have enough sense not to go through with any of this. But I think these BMO lawsuits must have something to do with a deal like this.

[Cowboy89]

Originally Posted by ranchlandsselling

But like I said earlier - I'd rather see the government or banks focus on the even more stupid lending.

The capacity for the 'stupid lending' you cite is ultimately determined in many ways by the housing market. I'm willing to bet that the only way many of Canada's leverage kings have avoided bankruptcy the past decade is that that their homes have increased so rapidly that they were able to get off their credit card balances by folding it into a HELOC or consolidating debt with their mortgage. Had homes not appreciated above and beyond real GDP the past decade I'm willing to bet a lot of people would have had to pound sand and cut back or just flat out seek out bankruptcy. It's why I'm thankful the BOC is not run by CREA.

[ranchlandsselling]

Originally Posted by Cowboy89

The capacity for the 'stupid lending' you cite is ultimately determined in many ways by the housing market. I'm willing to bet that the only way many of Canada's leverage kings have avoided bankruptcy the past decade is that that their homes have increased so rapidly that they were able to get off their credit card balances by folding it into a HELOC or consolidating debt with their mortgage. Had homes not appreciated above and beyond real GDP the past decade I'm willing to bet a lot of people would have had to pound sand and cut back or just flat out seek out bankruptcy. It's why I'm thankful the BOC is not run by CREA.

Fair enough. Kinda one of those chicken eggs things. However, I've been bonbared by credit card cheques (low interest teaser ones) and credit increases regardless of the equity in my house. I'd almost suggest the practices of the banks and CC companies is predatory. They hope people are stupid enough to max out and spend all available credit. Again, if the BOC or DOF are worries about the well being of Canadians they should address these practices too.

[chemgear]

http://business.financialpost.com/20...not-all-right/

Yet American Express suggests that Gen Y, who it describes as those born after 1983, has boosted fashion spending by 33% between 2009 and 2011, travel spending by 74%, and fine dining spending by 102%.

The same week, TD Canada Trust released a survey showing that more than half of those between 18 and 34 are carrying credit card balances. About 40% are just making their minimum monthly payment.

[Street Pharmacist]

Originally Posted by chemgear

http://business.financialpost.com/20...not-all-right/

Yet American Express suggests that Gen Y, who it describes as those born after 1983, has boosted fashion spending by 33% between 2009 and 2011, travel spending by 74%, and fine dining spending by 102%.

The same week, TD Canada Trust released a survey showing that more than half of those between 18 and 34 are carrying credit card balances. About 40% are just making their minimum monthly payment.

Holy ####

[photon]

And screwing around with mortgages and HELOCs isn't going to change that at all, if anything it'll make it a bit worse since those using house borrowing to feed consumer spending are just going to use CCs now, while the people who are being responsible just continue to be responsible with fewer options and more restrictions.

It doesn't really seem to address the root issue (household debt).

[Red]

Originally Posted by chemgear

http://business.financialpost.com/20...not-all-right/

Yet American Express suggests that Gen Y, who it describes as those born after 1983, has boosted fashion spending by 33% between 2009 and 2011, travel spending by 74%, and fine dining spending by 102%.

The same week, TD Canada Trust released a survey showing that more than half of those between 18 and 34 are carrying credit card balances. About 40% are just making their minimum monthly payment.

None of these youngsters have internet then because all I ever see online is young people paying off their CC every month, aggresively pay down their mortgage and invest the rest in a portfolio that would make Warren Buffet blush.

[brocoli]

[QUOTE=fotze;3762176]The thing about these articles that always bugs me is that there always has to be the line "Using your first credit card responsibly is a smart way to establish a strong credit rating ..." from some bank stooge.

Who gives a crap about a 'strong credit rating'. As long as its not pisspoor, who gives a fata. You don't get a better deal for having a 'strong' rating, you don't get shat.

QUOTE]

Actually it does matter when it comes to interest rates. Bankers have the ability to get a reduced rate depending on a person's credit score (among other factors), but even an average at best credit score will get you no deals. The difference from the minimum score to a strong score can be up to 3.5% (sometime a little bit more depending on your banker).

[Fire]

I really hate government intervention in private business but they might have to do something about this credit card debt or it will be the responsible people that are going to have to pay for it later.

If I was the government I would:
- enforce a mandatory minimum monthly payment of 10%.
- limit the max amount of credit someone can obtain based on their income.

[calgaryrocks]

I think for financing with the top deals (the 0% for 48 months etc) you have to have a strong credit rating, or they will accept a deal then the bank says you credit rating isn't good enough and you end up paying a rate

[linecook]

Originally Posted by Fire

I really hate government intervention in private business but they might have to do something about this credit card debt or it will be the responsible people that are going to have to pay for it later.

If I was the government I would:
- enforce a mandatory minimum monthly payment of 10%.
- limit the max amount of credit someone can obtain based on their income.

How about the credit cards lower their ridiculous high interest rates. I don't know where I heard this but I thought the government was looking at forcing credit cards companies to lower their interest rates. Anyone else recall this?

[The Yen Man]

Some of those credit cards have ridiculously high rates. 23%+ compounded daily? That's almost loan shark territory!

[albertGQ]

If you don't want to pay the rediculous credit card interest rates, its not that hard.

Here's a tip; don't charge stuff on your credit cards!

[Cowboy89]

Originally Posted by chemgear

http://business.financialpost.com/20...not-all-right/

Yet American Express suggests that Gen Y, who it describes as those born after 1983, has boosted fashion spending by 33% between 2009 and 2011, travel spending by 74%, and fine dining spending by 102%.

The same week, TD Canada Trust released a survey showing that more than half of those between 18 and 34 are carrying credit card balances. About 40% are just making their minimum monthly payment.

I'm all for another article talking about how stupid gen Y is with it's money (And I fully agree), but like always this article might be reaching with their use of statistics. I'm in the said age demographic and I would have to say that my spending habits (But not the credit card debt part) probably match the one's highlighted.

It's really easy to increase your use of fine dining over three years by 102% when you jump in age from 23 to 26. If you laid out money for one fine dining experience in 2009, you would only need to go out for one additional night of fine dining in 2011 to mark that increase. Is that really fiscally unreasonable considering many 26 year olds are probably making more money in 2011 than when they were 23 (moving from survival kraft dinner food in University days to the days of a steady pay cheque)? Same anaology and thought pattern on both travel and fashion spending.

For many people those three years marks a massive fiscal transition. The funny thing about those youth unemployment/underemployment statistics of the past few years is that many overlook the fact that there's still over half of us who are gainfully employed. Situations of the better half might very well account for greater components of those increases in spending.

[linecook]

I don't carry credit card debt anymore, but I was 18 once with a maxed out credit card and only paying the monthly minimum. Not sure how much money I've payed to AMEX, MC or Visa through the years. But with 40% of Gen Y paying the monthly minimum, no wonder Canadian's are in so much debt and it's only get worse. So other than stop using credit cards and lines of credit, how else do we get out of this mess we're in? BOC needs Canadians to keep spending but with money that is not borrowed while we have to pay down all the debt we've accumulated. While people like me have pretty much stopped all spending and putting all their money in savings. The maths pretty easy.

[chemgear]

Originally Posted by Cowboy89

I'm all for another article talking about how stupid gen Y is with it's money (And I fully agree), but like always this article might be reaching with their use of statistics.

Aye, and to be fair/clear - they do indicate that it's a survey. Kinda like how there are always surveys saying how Canadians are responsible because x% were surveyed to say that they "plan or want" to put lump sums against their mortgage, RRSP, etc.

[bizaro86]

Originally Posted by Cowboy89

I'm all for another article talking about how stupid gen Y is with it's money (And I fully agree), but like always this article might be reaching with their use of statistics. I'm in the said age demographic and I would have to say that my spending habits (But not the credit card debt part) probably match the one's highlighted.

It's really easy to increase your use of fine dining over three years by 102% when you jump in age from 23 to 26. If you laid out money for one fine dining experience in 2009, you would only need to go out for one additional night of fine dining in 2011 to mark that increase. Is that really fiscally unreasonable considering many 26 year olds are probably making more money in 2011 than when they were 23 (moving from survival kraft dinner food in University days to the days of a steady pay cheque)? Same anaology and thought pattern on both travel and fashion spending.

For many people those three years marks a massive fiscal transition. The funny thing about those youth unemployment/underemployment statistics of the past few years is that many overlook the fact that there's still over half of us who are gainfully employed. Situations of the better half might very well account for greater components of those increases in spending.

Yeah, when I was 23 I was just graduating, and did one nice dinner out that whole year (birthday). At 26 three years later, it's more like one nice dinner out a month. And it's about the same proportion of my income. It turns out working pays more than university.

[morgin]

Originally Posted by fotze

It is pretty hypocritical of the Canadian government (any party who has been in power) to talk about overspending.

I hope this isn't a (thinly) veiled attempt to correlate deficit spending with consumer debt. They are extrodinarily different beasts. I know this is a crazy concept for everyone who thinks the government basically owns one big credit card, but it can be economically beneficial to reduce overall national consumer debt while maintaining deficit spending for various reasons. There is absolutely no hypocricy in a politican saying that national consumer debt needs to be reduced while being pro running a deficit federal budget. That said, there are lots of economists who argue against deficit budgets during recessions (as there are those who argue for them), but it certainly isn't a black and white issue. At any rate, reducing arguments to "HURR they want me to not overspend on my personal finances because its bad for the country but they overspend on our country's finances so f-them!" is really kind of misunderstanding the argument.

[bizaro86]

Originally Posted by fotze

So spending more than you make, forever, makes sense. During recessions, not during recessions, just always spend more, forever and ever, year after year. You are right, I don't understand it, where does this money come from?

Aside from personal debt I do worry about the government debt. Were the Grecian formula people told by economists that this spending was awesome too?

Its like Alcoholic A being told by Crackhead raging alcoholic B to go to rehab. Sure Alky A needs to go to rehab, but Alky B, come on, you've been drinking before I was born.

If you waste 100,000 it's just stupid and wasteful, but if you take 100,000,000 and waste it that's economically important stimulus.