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Mortgage Rules Changed Again - It`s Official

[quote user=ThomasBeyer]by doing what ?



It is hard to regulate private firms that offer you to take money at 20%+ !






I'm not saying all my suggestions can be enforced but the gov seems to be able to do whatever it want when it's important to them.



So here are a few suggestions.



1. Increase minimum payments on credit cards

they have been getting lower and lower over the years to the point where people are hardly touching the principal and as long as you are paying the CC companies are happy and may even raise your limit.



Also by increasing minimum payments the CC companies will be forced to look at debt ratios and stop increasing limits, stop offering new cards.



2. Reduce the interest that can be charged

client will pay off card faster (unless the continue to charge)



3. Limit the # of cards being offered to people

I don't think you can limit the amount of cards that people apply for but if you regulate marketing it will help ( look what they have done with cigarettes in hopes less people will buy them)



4. Have standardized grace periods, statement dates, penalties, fees, etc.

Right now if you wanted to (start) manage your credit better grace periods are different, how they apply payments, how long before due date you get your statement, payment holidays, etc that it is hard to figure it out.



5. Rein in finance companies, car loan companies, etc with legislation that limits there interest rates, standardizes payment periods, and plans.



Make it more expensive and less appealing to obtain consumer debt and cheaper and more appealing to acquire a mortgage.



Thomas keep in mind these are just a few thoughts that may or may not be feasible or practical. There are advocacy groups out there that have been studying these issues and pressuring the gov to help the average person on the bottom climb up the lader to financial freedom. Sometimes when we find ourselves in the middle or near the top we can forget how hard it is for some people to get that push in the right direction.



Thanks

Mark
 
I agree with many of your thoughts, (especially the one about increasing the minimum payment on credit cards.)



However, if we change the usury laws so that lending at 15-18% is illegal, that lending will still happen but in a more dangerous way. Yes, banks and finance companies will stop doing it, but they won't lend money to bad risks at 7% instead, they just won't lend it at all.



Instead, people who have poor credit will end up borrowing money from loan sharks and payday loan type places. All that will do is increase the number of "unbanked" Canadians, which is bad for them and for the economy as a whole.



Regards,



Michael
 
The problem is not credit card debt. That has remained relatively stable over the last number of years. The largest issue is HELOCs. Take a few minutes to go through the BoC statistics. I happen to have to do that on a monthly basis for my day job. It is astounding how much they have increased in the last few years. People have essentially traded in their credit cards for HELOCs to take advantage of favourable rates.
 
[quote user=fumbrunner]People have essentially traded in their credit cards for HELOCs to take advantage of favourable rates.


That makes sense, though, doesn't it ? Borrow @ 4% vs. 24% ?



Yes, "credit" cards could be better regulated. 20%+ seems to be the norm even if one day or so late .. on the entire balance. Plus 2-3% paid by the merchant. A huge profit generator for banks. HUGE.



The banking industry has done a fabolous job of marketing them.



They should be called "evil cards" or perhaps "high interest rate debt cards" but they are marketed as "credit" cards !!



On the other hand, it is a business proposal one doesn't have to use as a consumer !
 
[quote user=countryproperty]So here are a few suggestions.


While I agree that these are great ideas one also has to keep in mind that consumers do NOT HAVE TO BUY A NEW CAR or GET A "CREDIT" CARD ! It is their choice. No one is forced upon it. Thus, one has to strike a balance of baby sitting every person's individual choices, even if bad ones !
 
[quote user=ThomasBeyer][quote user=fumbrunner]People have essentially traded in their credit cards for HELOCs to take advantage of favourable rates.


That makes sense, though, doesn't it ? Borrow @ 4% vs. 24% ?



Yes, "credit" cards could be better regulated. 20%+ seems to be the norm even if one day or so late .. on the entire balance. Plus 2-3% paid by the merchant. A huge profit generator for banks. HUGE.



The banking industry has done a fabolous job of marketing them.



They should be called "evil cards" or perhaps "high interest rate debt cards" but they are marketed as "credit" cards !!



On the other hand, it is a business proposal one doesn't have to use as a consumer !




Absolutely!! HELOCs could be just as evil. What happens if you happen to have high credit card debt and are unable to pay it down? Many just declare bankruptcy and live 7 years of misery. Now, banks have SECURED debt. Can't pay those bills? Lost your job? House stopped appreciating? We'll just take your home, thank you very much.



That is why the proposed changes make sense. Let's ensure that people have at least some equity in their homes, rather than maxing out any available credit they may have.
 
Err didn't seem to quote - Thomas's above long post - I support all aspects of it

10% DP minimum - What the other poster from NB is missing is that if you have a high ratio mortgage your ability to move, lets say for a needed job in another area, can become more limited - After transactions costs you lose money, money that you might not have - in a down market this can force a bankruptcy situation.
 
[quote user=ThomasBeyer][quote user=countryproperty]So here are a few suggestions.


While I agree that these are great ideas one also has to keep in mind that consumers do NOT HAVE TO BUY A NEW CAR or GET A "CREDIT" CARD ! It is their choice. No one is forced upon it. Thus, one has to strike a balance of baby sitting every person's individual choices, even if bad ones !




Indeed. Personal choice is alive and well, which is probably a good thing. Now, if we could only get people to make better choices... ;)



I personally use my credit card for just about everything. I always pay it off every month, so I never pay interest. Then, I take the points and they pay for my hotels when I'm on vacation. So the current system is actually working out quite well for me. It just requires the discipline to not spend more money on your credit card than you have resources to pay the bill.



Regards,



Michael
 
I think Flaherty has taken measured steps to mitigate what could become an escalating situation for borrowers.

I don't know what the rest of you are thinking - what are you thinking???

We still live in a free society and freedom of choice of how & where we spend our money should be part of that choice. All this talk of legislating this & that takes away freedoms. I base my value system on having the freedom to choose how & where I want to live, this freedom is presupposed by the fact that my decisions are not harming myself or anyone else. I guess the socialists could have a field day with that statement.



Too much talk of legislation here, how about financial education and educating people on the difference between good debt and bad debt. Good debt is s/th that creates cashflow - right. A little education can however be a bad thing. A good measure of prudence must go along with this, that and a sound value system dictating one's motivations and responses (ie. pay your debts no matter what...)

More legislation just makes me gag, we don't need more nannys, we need more strong father figures.
 
Hi all, this post reminds me of previous posts where people try to convince others that blue is more beautiful than green.

Thomas et al, there is no `right down payment %`. if there is one tell us what it is (20%?) and prove to us that 19% or 21% is just wrong J


A more risky investment is not in general better or worse than a less risky one.


One`s risk aversion level is a personality trait. There is no ideal risk aversion level.



Hopefully, this also helps members `from the other post`, shocked by REIN members not buying RE, understand why they are not buying. becasue the last are also right. Cheers!
 
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