Personal Finance

What do you think of these recommendations?

  • Last Updated:
  • Apr 9th, 2020 10:46 pm
[OP]
Deal Expert
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Apr 21, 2004
54410 posts
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What do you think of these recommendations?

The first seem to make sense.

https://business.financialpost.com/real ... ted-crisis

Step One: Allow homeowners to use home equity to pay off debts

Step Two: Implement a 12-month Equifax/TransUnion Reporting freeze

Step Three: Reduce Canada’s criminal interest rate from 60 per cent to 25 per cent
5 replies
Deal Expert
Aug 22, 2011
35074 posts
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Center of Universe
Assuming those in the hole will be disciplined enough to not continue racking up consumer debt.
I for one, do not have faith that these folks will utilize something like this responsibly.
Deal Fanatic
Aug 21, 2007
5543 posts
490 upvotes
Markham
alanbrenton wrote: The first seem to make sense.

https://business.financialpost.com/real ... ted-crisis

Step One: Allow homeowners to use home equity to pay off debts

Step Two: Implement a 12-month Equifax/TransUnion Reporting freeze

Step Three: Reduce Canada’s criminal interest rate from 60 per cent to 25 per cent
Why would bank and non bank lenders be on side with this?

They’d have incentive not to approve as to protect their credit card and other high interest profits...id see this as a non starter.
[OP]
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Apr 21, 2004
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adeel wrote: Why would bank and non bank lenders be on side with this?

They’d have incentive not to approve as to protect their credit card and other high interest profits...id see this as a non starter.
Step 1: government / regulatory decision
Step 2: government / regulatory / banking decision
Step 3: government / regulatory decision

Of course we don't know what kind of side deals the Federal government is discussing with the banks currently. I'm not saying the banks like the idea of Step 2 but for Step 1, they will make more money through refinancing (secured lending), will likely set aside lower loan loss provisions and FI's will at least look good in the public's eyes. For Step 3, none of the banks charge more than 25% interest on their products anyway so it will be private lenders who will lose business.
Member
Apr 3, 2009
311 posts
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Edmonton
Wouldn’t anyone with home equity already have low interest mechanisms for drawing on that equity?

home equity and high credit card debt probably also correlate to fully utilized HLOCs.
[OP]
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Apr 21, 2004
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Generalizations like that are likely flat wrong. An extra 10-15% (90-80% LTV) of appraised value can probably wipe out many higher interest rate loans.

Why wouldn't people tap into that extra equity if possible is beyond me.

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