All posts by VCI Admin

Friday Free-for-all! March 24th 2017

Slacker edition!

This is our regular end of the week news round up and open topic discussion thread for the weekend. It’s Friday Free-for-all time! 

Normally we post links here, but we’re doing the bare minimum at the moment- may add those later. Meanwhile, what are you seeing out there? 

Post your news links, thoughts and anecdotes in the comments below and have an excellent weekend! 

Debt addicts face painful withdrawal

Canadians love debt that gets sunk into ever rising property prices and banks and other lenders have been happy to provide.  As long as rates only go down this is a pretty good situation, but what if rates were to go the other way one day?

Financial companies have been more-than-willing lenders. But there are several reasons why Canadians have been such enthusiastic borrowers.

Last week, new figures showed that consumer lending now totals more than $2 trillion, a new record. As we reported last week, for every dollar of Canadians’ disposable income, they owe almost $1.67.

From the point of view of Canadians, money has never been so cheap. But the rising cost of housing, especially in the country’s biggest cities, has also drawn people into taking on more debt.

Continue reading Debt addicts face painful withdrawal

And now a political message from Dave

Dave sent in the following opinion, in which he throws up his hands in despair at the state of politics in BC and its role in the housing bubble.

If there was ever an election to vote for None of the Above, this would be it.

I no longer believe that any of the three major parties represent the interests of the average British Columbian. Each have sold themselves out to Special Interest groups of one type or another.

I’ll first start with the BC Liberals because they are looking for a fifth term. I have been a party member, volunteer and voter for the BC Liberals each of the last four elections. I am also a small business owner and employer and I generate a healthy income. In theory, I’m the easiest vote the Liberals should ever get. But they aren’t getting my vote this time.

Continue reading And now a political message from Dave

Blame the banks

Southseacompany pointed out this article in Canadian Business about how the banks have become complicit in the housing bubble, which strikes us as a bit unfair since any bank would be foolish to not take part in the low risk high profit business of mortgages.

As long as government is willing to take on the majority of risk and encourage high debt loads, why should a single bank step back from that money?

In a rational world, the banks could be counted on to help contain the housing mania that has put Canada in this perilous situation. Before the early 1950s, Canada’s biggest lenders had little interest in real estate, according to Charles Calomiris and Stephen Haber, the authors of Fragile by Design, a highly praised international history of the interplay between politics and banking.

That changed after William Lyon Mackenzie King created the Canada Mortgage and Housing Corp. at the end of the Second World War to backstop the construction of new homes for returning soldiers. Nothing stirs a banker like risk-free lending. By 1954, the banks had convinced the government to change their charters so they could join the post-War building boom. In 1992, they were cleared to buy the trusts that were the initial beneficiaries of CMHC’s backstop, triggering the consolidation that cemented today’s oligopoly.

In November 2015, the average monthly holdings of mortgages at Canada’s chartered banks exceeded $1 trillion for the first time. The figure continues to climb, reaching $1.07 trillion in December, according to the Bank of Canada’s most recent statistics. That’s more than double what the chartered banks commit to business lending.

Read the full article here.