Finance minister is looking at the wrong kind of loans
When did Finance Minister Jim Flaherty also become the governor of the Bank of Canada? I ask this question because, correct me if I’m wrong, but isn’t it the Bank of Canada that guides Canada’s banks and lending institutions to raise or lower interest rates on mortgages and similar loans according to economic conditions?
Why did he really make the call to a certain bank to halt its lowercost mortgage? If Flaherty wants to make it more difficult for people to borrow, I think he is looking in the wrong place for the problem. The problem is easy money, the cost of this easy money and those that should not have it.
Interest rates on unsecured debt such as credit cards (banks, stores, gas companies, etc.) are astronomical (most are over 17 per cent and some are over 25 per cent). Many furniture, appliance and similar stores offer financing, but if you fall behind on your payments, the penalties are outrageous.
Short-term lending centres that offer quick cash charge loan-shark rates and approvals come too easy (most do not conduct a credit check, just ask that you bring a paystub — which is not even proof of employment; a 14-day loan from one centre has an effective annual interest rate of 546 per cent and if your payment bounces there is an extra charge of $47.50). These companies are subject to the Payday Loans Act and not held to the same standards as banks, credit unions and similar credible financial organizations.
If Finance Minister Jim Flaherty wants to help protect Canada’s economy and the financial health of Canadians, he should put his feet on the street and get in touch with reality. Whether a home buyer pays 2.85 per cent or three per cent on the mortgage is not a danger to Canadians’ financial health. What is putting Canadians’ financial health in danger is the cost of easy money and those that should not have it. Minister Flaherty wouldn’t have to worry about that himself: I’m sure all he has to do to borrow is to make a call.
But I wonder if a certain bank whose initials start with B and end in O would approve him after he strong-armed them in to withdrawing a mortgage offer that would attract customers and save Canadian homeowners money. Brian McCormick Mount Pearl