Bank offers you should not accept

Many Franks pointed out this article in the Financial Post, which offers a flipside view to yesterdays “do whatever it takes to scrape up 5%” article.

It has a real simple message: Banks exist to make money.  That includes making offers that sound good but may not be in your best interest.

While many people want to blame the banks or the government for Canadas alarming consumer debt problem, theres only one person who is truly to blame: the consumer.  Sign yourself up for a suckers deal and you have only yourself to blame.

While some bank chief executives have put it on themselves to tighten their own lending rules, others continue to look to Ottawa to take the lead.

In the interim, all you have to do is walk into a branch, grab some pamphlets and you will see an array of offers that could get you into even more debt trouble.

One of my favourites is the cash-back mortgage. It is offered to a varying degree by most of the major banks, so there is no point in picking on any one institution.

Here’s the offer: Take out a mortgage for more than five years and get 5% of the value of the mortgage up front to a maximum of $25,000. In other words, get a $500,000 loan and immediately get $25,000 back. “It’s great for first-time buyers,” we’re told.

Really? If the loan is at the posted rate of 5.44%, which it usually is for these types of mortgages, you could easily land into more debt trouble long term.

Another deal tries to lure me over to a new bank with an offer of 2% cash up front, or up to $4,000 on $200,000 if I switch to the financial institution. But what about the costs to break my existing mortgage, and is there really any point in switching products to get that cash right away if I’m going to end up with a higher rate and a less-flexible mortgage?

“Somebody is going to pay for it,” says Kelvin Mangaroo, president of RateSupermarket.ca, about the cost of the promises. “Sometimes there is more fine print than the actual offer.”

Check out full article here.

What do you think, do we need more consumer protection to protect consumers from themselves?

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jesse
Member

Banks exist to lend, no surprise that no matter how much people claim they don’t want to borrow, governments claim they are changing credit conditions, and banks claim they are prudent lenders, banks keep on finding ways to lend out their money to the fullest extent possible to someone, somewhere. It’s an important postulate.

patriotz
Member

The more uncertain the economic situation, the more valuable it is to the banks to eliminate lending risk.

And what’s the easiest way for them to eliminate lending risk? You know the answer.

jumpin in
Guest
jumpin in

http://www.cnbc.com/id/47012033

Forget China GDP, Other Indicators Paint Bearish Picture

900kCrackHouse
Guest
900kCrackHouse
The great circle of incompetence…. 1)People rely on banks to give them an accurate picture of what they can afford to borrow. People actually give themselves a pat on the bank if a bank will grant them a large loan because it somehow implies they are “worthy”. 2) Banks rely on the government to regulate what they can do. As long as they are opperating within the regulatory environment, they are ok, but they know and we know that opperating at the edge of the regulatory environment produces the most short term cash (risk / reward). 3) The government relies on people to be able to rationally analyze their finances and their future risks, and not borrow too much even if the banks will be happy to give it to them at extremely low interest rates. People are calling the… Read more »
southseacompany
Member
southseacompany

Some letters to the Van Courier re: Euegn Klein’s “30% rise in Maple Ridge” statement.

http://www.vancourier.com/news/letters+week/6439939/story.html

http://www.vancourier.com/opinion/editorials/letters+week/6439940/story.html

Bailing in BC
Guest
Bailing in BC

can someone do me a favour and post my comment on yesterdays post “can’t save a dime” on “Real Estate Talks”? The evil admin there has locked me out. Start a new thread or post it under the “Afordable detached (>400k) w/Vancouver Commute” thread. Thanks

southseacompany
Member
southseacompany

And now Kevin Falcon is a bear: “B.C. House Prices to Drift ‘Downward,’ Falcon Says”

http://www.businessweek.com/videos/2012-04-10/b-dot-c-dot-house-prices-to-drift-downward-falcon-says

Also in the print edition of the Sun today, but I can’t find web version.

patriotz
Member

@900kCrackHouse:
People don’t have a single motivation or will to act on, and the banks are not allowed to act on a single will even if they have one.

But the government does and can.

Bailing in BC
Guest
Bailing in BC

Thanks Jesse

jumpin in
Guest
jumpin in

Kelvin Falcon interview:
Housing market is @12:45

VanRant
Guest
VanRant

A friend of mine who works for the big bank was told that her job will be terminated and move to India…. after she had purchased a pricy condo!!!!

gokou3
Guest
gokou3

The best consumer protection is financial education.

Vansanity
Guest
Vansanity

http://anabellebf.com/2012/03/18/dont-move-to-vancouver-why-i-changed-my-mind-after-6-months/

This is making its rounds on twitter this morning. A good read.

patriotz
Member

@gokou3:
“The best consumer protection is financial education.”

http://www.washingtonpost.com/wp-dyn/content/article/2005/10/26/AR2005102602255.html

Ben S. Bernanke does not think the national housing boom is a bubble that is about to burst, he indicated to Congress last week, just a few days before President Bush nominated him to become the next chairman of the Federal Reserve.

U.S. house prices have risen by nearly 25 percent over the past two years, noted Bernanke, currently chairman of the president’s Council of Economic Advisers, in testimony to Congress’s Joint Economic Committee. But these increases, he said, “largely reflect strong economic fundamentals,” such as strong growth in jobs, incomes and the number of new households.

N
Guest
N

@Vansanity:

I wonder if this is partially an age thing. I’ve made tons of good friends here and take advantage of something special about Vancouver (mountains/water/weather/food etc.) at least five times a week. But then, I am nearly 50 and have my own business. I’m also used to living in much more expensive cities. It’s possible that Vancouver doesn’t have much to offer relatively young people from cheep places like Montreal.

What?
Guest
What?

Vancouver is great. Just moved from East and bought a 2br in East van for 380K. $1300 monthly payment. Love it. And No landlords to deal with.
Basements are for the losers

What?
Guest
What?

@VanRant:
a friend of mine got killed in India. And another friend got cholera.

What?
Guest
What?

Why don’t you rent in Winnipeg? The rent is cheaper there!

Laibach
Member
Laibach

US housing price snapshot: What $200,000, $500,000 and $1 million buys in 4 cities.

http://tinyurl.com/ce2e9mh

What?
Guest
What?

I am going to ALWAYS RENT!!! Owning is for the capitalists!
Rent is always better! You can move anywhere anytime. I am not gonna buy till I am at least 30!

What?
Guest
What?

Correction is coming to this forum! Way too many foreclosures!

What?
Guest
What?

The reason I immigrated to Canada was because I wanted to finally be able to rent. It was so frustrating to own a house: I hated taking care of things. Now it’s my landlords headache. Yes he can kick me out anytime but it’s a small price to pay.

What?
Guest
What?

Vancouver’s renting market is overheated and due to correction. The inventory is gonna hit 17000 very soon. The rent will drop 30-40% very soon as a result of overall collapse. The end is near.

What?
Guest
What?

April 11

New Listings 101
Price Changes 211
Sold Listings 459

TI:16275

/dev/null
Member
/dev/null

@What?: The cool thing about rents is that they are limited by income. If they go up too high then people will just move away or not come in the first place, reducing demand. If you make an average wage you can afford an average rental. Which is why I can live in a SFH in Van West. Not so for purchasing – I’d be out in Mission.

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