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Steven Iarusci

The Canadian Press: Canadian borrowing grows 4.5 per cent in first quarter from year ago - 0 views

www.google.com/...M5hYICAWLxLq6MaVwA5-1OwnCM__kg

canadian debt consumer borrowing

shared by Steven Iarusci on 02 Jun 11 - No Cached
  • Canadians' average non-mortgage debt grew 4.5 per cent to $25,597 in the first quarter compared to a year earlier, signalling that consumers aren't necessarily clamping down on borrowing even as they rein in spending.
  • Total debt per consumer, including credit cards, car loans and lines of credit but excluding mortgages, was up from $24,497 in the same quarter of 2010,
  • most in Quebec and Newfoundland and Labrador, with debt rising by 7.8 per cent in both provinces, while British Columbians had the highest average consumer debt at $36,649
  • ...12 more annotations...
  • consumer debt rose in all provinces
  • the trend still remains modest compared to the double-digit, pre-recession levels
  • Average credit card debt
  • sign of troubled credit health, the national credit card delinquency rate — the ratio of credit card accounts that are 90 days or more overdue — grew 11 per cent from the first quarter of 2010.
  • average borrower debt on auto loans was also up in the quarter — by 12.4 per cent to $16,189 from $14,402 in the first quarter of 2010
  • Lines of credit are the most popular form of consumer debt
  • more than 41 per cent of outstanding debt at the end of the first quarter
  • consumers should take care to rein in their borrowing
  • consumer spending slowed during the first quarter, to just 0.1 per cent growth
  • consumers are focused on consolidating debt after borrowing heavily during the recession
  • higher energy and particularly gasoline prices are taking a bigger bite out of household budgets, leaving less for other forms of expenditures
  • high levels of indebtedness are expected to weigh down purchases going forward
Steven Iarusci

Canadians load up on mortgages, cut card debt - 0 views

www.montrealgazette.com/...story.html

credit card debt mortgage rates bubble housing

shared by Steven Iarusci on 02 Jun 11 - No Cached
  • The bank set aside $145million in provisions for credit losses, down $104-million as more customers repaid their loans.
    • Steven Iarusci
      Steven Iarusci on 02 Jun 11
       
      BMO is the bank in question.
  • consumer credit-card balances are declining as bank customers start to heed warnings about taking on too much debt
  • On the residential mortgage side, Mr. Downe said he expects to see growth start to "soften" in the coming months
  • ...8 more annotations...
  • record household debt levels have left this country vulnerable to economic shocks
  • the Canadian banks will report a slight increase in profit for the quarter as they contend with the impact of declining consumer borrowing, moderating capital markets activity and other headwinds.
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  • With domestic household debt levels hovering close to where they were in the United States prior to the financial crisis, many observers are warning that Canadians need to start paying down debt if the economy is remain on level footing
  • anadian consumers continue to pile on mortgage debt despite repeated warnings that they need to crank back on borrowing if this country is to avoid a painful real estate correction
  • Canadian consumers continue to pile on mortgage debt despite repeated warnings that they need to crank back on borrowing if this country is to avoid a painful real estate correction
  • growth in the overall home loan market "is continuing to be more robust,"
  • Canada's fourth-largest lender on Wednesday kicked off second-quarter bank earnings season with a 7.5% increase in profit on the back of lower provisions for bad loans
Dmitri Tkachenko

Surprise: Low interest rates seen sticking around - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2032075

Low Interest Rates Bonds Financial Industry Inflation Stock Market

shared by Dmitri Tkachenko on 25 May 11 - No Cached
  • Dmitri Tkachenko on 25 May 11
     
    "Interest rates have recently being going somewhere unexpected: down. With the United States government bumping up against its debt ceiling, inflation ticking upward, and a growing debt crisis in Europe, most expected interest rates to be increasing.If so, it will mean pain for savers, but good news for borrowers .A drop in interest rates is equivalent to a sale on the price of money, and corporations are already rushing to take advantage of the easy lending conditions, even if they're in no immediate need of funds. Mortgage rates have fallen, too - good news for homeowners looking to refinance. But lower rates have not turned out so well for some of the market's savviest players, including Bill Gross, the founder of Pimco, the world's biggest bond fund. Earlier this year, he sold his U.S. Treasuries, because he thought interest rates were poised to rocket higher, which would drive down prices of bonds. Oil has been trading consistently around the $100-a-barrel level, thereby lifting inflation, another bond-market negative. Investors are getting nervous and growing more willing to buy super-safe government bonds."
Linda Lei

Canada Tightens Mortgage Rules to Curb Household Debt - Businessweek - 0 views

www.businessweek.com/...es-to-curb-household-debt.html

consumer debt mortgage

shared by Linda Lei on 03 Jun 11 - No Cached
  • Jan. 17 (Bloomberg) -- Canadian Finance Minister Jim Flaherty tightened rules to restrain record household borrowing, giving the Bank of Canada more scope to extend a pause in interest rate increases.
  • Flaherty said today Canada will shorten the maximum amortization period for government-insured mortgages to 30 years from 35 years, lower the maximum amount homeowners can borrow against the value of their homes, and withdraw its insurance on home-equity lines of credit
Benjamin Gray

Energized by growth, China enters U.S. talks with confidence - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2014611

leverage

shared by Benjamin Gray on 03 Jun 11 - No Cached
  • At the same time, America’s biggest foreign creditor wants assurances that its $1.2-trillion in U.S. Treasury holdings are safe despite uncertainty in Washington over how much money the U.S. can borrow to pay its bills. If Congress fails to increase that borrowing limit before August, that would likely send interest rates soaring and reduce the value of those Chinese investments
  • China’s expanding economic might will give it greater leverage now.
Steven Iarusci

Report cautions that over-indebted consumers can't drive economy - 0 views

www.vancouversun.com/...story.html

economy consumer debt growth

shared by Steven Iarusci on 02 Jun 11 - No Cached
  • a rate hike may come in the fall
    • Steven Iarusci
      Steven Iarusci on 02 Jun 11
       
      Interest rates
  • the main message is that consumers cannot be the main engines of economic growth over the next couple of years,” the authors conclude. “Instead, the economy will have to rely on other sources of growth, such as exports and business investment.”
  • Canadians have “eased off the debt-accumulation throttle,”
  • ...8 more annotations...
  • still net borrowers, meaning they borrow more than they save
  • consumer spending will not be the engine of economic growth in the coming quarters and the inevitable future rebalancing of monetary policy will be a shock to many households
  • some of the drop in household indebtedness is explained by strong income gains, not by debt repayment per se
  • sustainable personal growth is likely in a range of 4.0-4.5 per cent. Credit continues to grow at a pace that is two percentage points above that
  • the level of Canadian household debt — which in December officially surpassed those of our neighbours to the south — is unsustainable
  • total consumer debt load is reported to be about $1.5 trillion
  • Data released late last year suggested Canadians owed on average $112,000 — a figure that includes all kinds of debt, including mortgages — and a debt-to-income ratio of 150 per cent means they were spending $1,500 for every $1,000 in take-home pay
  • Factors that will moderate credit growth over the short term include spending fatigue, a soft landing in the housing market, stricter mortgage rules and Canadians preparing for the higher interest rates that are sure to come as the economy recovers.
Heshani Makalande

Canadian debt load: $26,000 - excluding mortgages - Moneyville.ca - 0 views

www.moneyville.ca/...ebt-26-000-excluding-mortgages

housing prices

shared by Heshani Makalande on 01 Jun 11 - No Cached
  • Already at record levels, Canadians now owe just under $26,000 on average on their lines of credit, credit cards and auto loans, according to credit rating agency, TransUnion.
  • That’s an increase of 4.5 per cent, or another $1,000, over the same period last year.
  • The fear is that higher rates could push more consumers beyond their ability to repay their loans
  • ...10 more annotations...
  • Debt growth in Canada is slowing from the double-digit pace seen before the recession
  • And total borrowing, including mortgages, typically the biggest household loan, is slowing, major Canadian banks said recently in their quarterly reports.
  • The Bank of Canada’s trend-setting overnight lending rate is just 1 per cent. But with inflation running at 3.3 per cent, above the central bank’s ideal range, Carney is under pressure to start raising lending rates to dampen demand.
  • Total debt per consumer increased to $25,597 in the first three months of this year,
  • Among types of loans, TransUnion said credit card debt, usually the most expensive to carry, barely budged from a year ago, falling $25 to an average of $3,539.
  • In a sign some borrowers may already be struggling, the national credit card delinquency rate rose 11 per cent. The rate measures the ratio of consumers who take 90 days or more to pay their bill.
  • The average line of credit, the most popular loans for their low cost and high flexibility, rose 5.9 per cent to $33,762 compared to last year. However, total line of credit debt declined for the first time in five quarters.
  • One noticeable shift was the decreased use of lines of credit, Higgins said. The category is the largest among consumer loans, making up 41 per cent of the total, and even more in Ontario, at 57 per cent
  • The study found debt loads rose in all provinces, led by Quebec and Newfoundland and Labrador. British Columbians had the highest load at $36,649.
  • Lines of credit are the most popular form of consumer debt, excluding mortgages, accounting for more than 41 per cent of outstanding debt at the end of the first quarter. Debt on lines of credit stood at an average $33,981, up 5.9 per cent from $31,867 in the first quarter of 2010.
dani tav

Op-Ed: Canada's deflating economy - 1 views

www.digitaljournal.com/...307371

Government attempts to Bail out Canada Debt Large Defecit

shared by dani tav on 01 Jun 11 - No Cached
  • The reason for the minimal GDP growth that we had was government spending increased over this period and government debt increased by about $139 billion.
  • Government Debt
  • The government is in a dilemma now. Despite the rosy forecasts they like to create showing how well our economy is doing there are reasons for major concerns.
  • ...4 more annotations...
  • Government spending cannot continue to increase especially when it is financed by debt. The recession was started by economies overloaded with debt. Rather than deal with the imbalances government decided to increase spending "grow the economy" and create more debt. Now we are in a predicament that there are no tools left for governments to throw at the economic problems.
  • Canada's net debt had grown to $582 billion, up from $516 billion two years earlier.
  • The government's attempt to continue economic growth by borrowing has failed. Canada's economy is going nowhere and we are farther behind because of government debt. The future does not look much better for Canada's economy.
  • government borrowing huge amounts of money to bolster the economy
Susan Cui

Canadian house prices continue to rise, although April sales down - 6 views

www.montrealgazette.com/...story.html

Housing Price Falling sales Rising Prices

shared by Susan Cui on 23 May 11 - No Cached
  • Canadian home prices continued their upward march in April, driven by strong investor demand in Vancouver, while cracks in the Toronto condominium market may be starting to appear.
  • The Canadian Real Estate Association said Tuesday the average price of a home sold in April across the country was $372,544, up eight per cent from a year ago.
  • but the Ottawa-based group cautioned that the figure was skewed due to "surging multimillion dollar property sales in selected areas of Greater Vancouver."
  • ...13 more annotations...
  • slow April sales figures
  • saw activity dip 4.4 per cent from March
  • The slow sales are said to have been driven by new mortgage rules which came into affect April 19 and made it tougher to borrow.
  • Changes to mortgage regulations that took effect in April 2011 likely sidelined a number of first-time homebuyers. By contrast, higher end homes sales in Greater Vancouver and Toronto had their best April ever.
  • more than 50 per cent of condominiums sold in the past year were purchased by buyers who do not intend to occupy their units and plan to rent in many instances.
  • People are buying these for capital appreciation.
  • Don Lawby, chief executive of Century 21 Canada, says the housing market has been affected by foreign investors who have reacted to tougher tax rules in their home country by investing abroad.
  • They are not afraid to offer above price and they are not afraid to get into a bidding war
  • Nevertheless, Lawby says
  • these investors
  • are small and the impact on the larger market minimal.
  • while April numbers present a market with falling sales and rising prices,
  • market conditions were exaggerated by some one-time issues.
dani tav

Wonkbook: Debt limit vote, part I - Ezra Klein - The Washington Post - 1 views

www.washingtonpost.com/...AGKSoMFH_blog.html

Government Spending Budget Cuts debt Housing Price

shared by dani tav on 31 May 11 - No Cached
  • a proposal Tuesday that would increase the nation’s ability to borrow money without also making major cuts in federal spending
  • initial request that the nation’s $14.3 trillion debt ceiling be lifted without any accompanying spending reductions
  • politically impossible.
  • ...7 more annotations...
  • o get my vote on the debt ceiling..Medicare will be a part of it
  • argued against using $80 billion in taxpayer dollars to try to save General Motors Co., Chrysler and many of their suppliers."
  • economy
  • he ownership rate is now back to the level of 1998, and some housing experts say it could decline to the level of the 1980s or even earlier
  • Cutting tax breaks for retirement won't raise a lot of money;
  • economists largely predicted the U.S. recovery would ramp back up as short-term disruptions such as higher gas prices, bad weather and supply problems in Japan subsided
  • medical school free
Heshani Makalande

Banks trim mortgage rates - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2037912

Mortgage rates

shared by Heshani Makalande on 28 May 11 - No Cached
  • Four of Canada’s biggest banks are once again lowering residential mortgage rates at a time when falling government bond yields are cutting funding costs for financial institutions.
  • Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia and Bank of Montreal are all trimming their posted rates on popular five-year fixed-rate mortgages by 0.1 percentage point to 5.49 per cent among other reductions.
  • The last time they did so was on May 19 when rates for five-year closed mortgages fell by 0.1 percentage point to 5.59 per cent.
  • ...4 more annotations...
  • RBC, TD, Scotiabank and BMO are also trimming interest rates on Saturday for a number of other residential mortgage products, including various special offers.
  • This latest round of mortgage rate cuts was prompted by falling yields on government bonds across a range of terms, said TD spokeswoman Barbara Timmins in an e-mail.
  • For instance, the yield on the five-year Government of Canada benchmark bond was 2.33 per cent on Thursday, down from 2.58 per cent on May 2 (the first business day of the month), according to data on the Bank of Canada’s website.
  • Banks usually try to match maturities when they use bonds to finance consumer mortgages. As a result, a five-year government bond would be matched up with a five-year consumer mortgage.
    • Heshani Makalande
      Heshani Makalande on 28 May 11
       
      Currently it is easy to get a mortgage because the interest rates are low. This is good news for consumers who will continue to enjoy record low interest rates on mortgages and other borrowing.
Benjamin Gray

Leveraging debt to boost returns - The Globe and Mail - 0 views

www.theglobeandmail.com/...article1976407

leverage

shared by Benjamin Gray on 03 Jun 11 - No Cached
  • Nearly one in two clients – 46 per cent of those polled in the bank's private banking division – are using leverage as an investment strategy.
  • Using borrowed money to mini- mize taxes has also become common. Changing the mindset of the investor has been key, said Robert Doyle, head of client structures for RBC. In the past, such leverage was generally used as a short-term strategy rather than a long-term foundation for building wealth.
Benjamin Gray

Canadians take Carney's debt warning to heart - The Globe and Mail - 0 views

www.theglobeandmail.com/...article1998341

leverage

shared by Benjamin Gray on 03 Jun 11 - No Cached
  • At the time, the average household debt level including mortgages had reached a record 146 per cent of personal disposable income.
  • Ottawa also moved to lower the amount Canadians borrow against their home, reducing the amount homeowners can leverage in a mortgage refinancing to 85 per cent of the property’s value, from 90 per cent.
  • Even though Canada’s economic downturn was shorter and less brutal than in many countries, rising debt could be a problem in a future downturn, particularly if housing prices are hit.
Maria Li

Canadian consumer debt rises $1,000 per person - 1 views

money.canoe.ca/...20110601-122929.html

Consumer Debt

shared by Maria Li on 03 Jun 11 - No Cached
  • The average debt load per Canadian consumer rose 4.5% this quarter over last year, according to new figures compiled by TransUnion
  • That works out to $1,000 per person and excludes mortgage costs.
  • Credit card, line of credit and auto-loan debt jumped most in Quebec and Newfoundland and Labrador with gains of 7.8% in both provinces. Quebec's total average debt load per consumer stood at $18,025 for the quarter. Newfoundland's was $23,372. The national average is now $25,597.
  • ...2 more annotations...
  • Lines of credit are the largest category of consumer debt in the country accounting for 41% of all outstanding debt though delinquency rates are very low. Line of credit debt was up 5.9% in the quarter over last to an average of $33,981. When compared to the final quarter of 2010 however, line of credit borrowing is down for the first time in several years.
  • This may be “an early sign that Canadians are shifting to a more conservative and restrictive form of financing to manage their debt loads,”
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