Cost of Borrowing is Rising!

I received many great responses to my last article.

Most of you agreed with me that Canadian style housing meltdown is inevitable but one guy emailed saying “there is no way it will happen here”.

Boy, I certainly hope he is right!

However, Canadians received more proof of the global credit crunch hitting home after this country's biggest banks began hiking their residential mortgage rates in an effort to recoup higher funding costs from their customers.

All mortgages have become money losers for banks because of the cost of funds due to all the challenges that are going on in the world right now.

The interest rate increases follow days of forewarning by financial experts, who predicted Canadians would feel the pinch of the financial crisis through higher borrowing costs on consumer loans.

Bank of Canada Governor Mark Carney said that the credit crunch could intensify the current global economic slowdown and would have an impact on the cost of capital in Canada.

Investment bank Merrill Lynch Canada said that Canadian households are so deeply in debt that a "tipping point" is in prospect for the overall real estate market.

BMO Capital Markets recently warned that housing prices here need to fall nearly 10 per cent more than they already have to bring them back into line with household incomes, while a study by the University of British Columbia said that in some major cities prices would have to plunge 25 per cent.

The housing market is cooling, the stock market is reeling and to top it all off, consumers are now facing rising mortgage rates.

The increase means Canadian home owners are taking a direct hit from the sub-prime crisis, with banks passing on their higher borrowing costs to you.

Canada's economy is starting to retreat. With a well-paying, steady job, you have the confidence to take on long-term debt but what if you lose your job or your hours are cut back?

Take action now…

Go to my website page http://www.joemalek.com/refinance.html to learn more about your options and consolidate your debt today!

Joe Malek, AMP
www.joemalek.com

Canadian Housing Meltdown!

Contrary to the prevailing view that Canada's housing and mortgage markets are more stable than their U.S. counterparts, Merrill Lynch is warning that this country could face a meltdown that's similar to the one that has ruined the American economy.

In a report issued Wednesday, Merrill Lynch Canada economists said many Canadian households are more financially overextended than their counterparts in the United States or Britain.

They said it's only a matter of time before the "tipping point" is reached and the housing and credit markets crack in Canada.

The Merrill Lynch Canada report by economists David Wolf and Carolyn Kwan acknowledges that the analysis is more pessimistic than the prevailing view.

Many economists have been saying that Canada's housing and banking sectors are much more stable than their American counterparts and will likely slow down but not crash.

Prime Minister Stephen Harper said yesterday that Canada's mortgage market is in good shape and there is no risk of it collapsing, but I think there's a credit problem because Canadian homeowners have been struggling for some time and it sure looks like recession is coming.

I receive hundred of calls each month from people who are either struggling to make minimum payments on their loans, mortgages and other consumer debt or they are already several months behind on their credit cards and mortgages.

It seems like every second homeowner who is contacting me for solution to their problems is one who is about to lose his or her home.

I agree with Merrill Lynch Canada and I urge you to take action and consolidate all your debt into one payment before it is too late!

Property values are declining right across this country, lenders started to tighten credit, rates are increasing and the cost of borrowing is going up by the day…

Don’t be waiting for a freight train to hit your household… go to my website http://www.joemalek.com to apply online today.

You’ll be glad you did!

Joe Malek, AMP
www.joemalek.com

Canadians will face tougher times ahead

The rate of increase in the cost of living hit the highest level in more than five years last month, increasing to 3.5 per cent on an annual basis from 3.4 per cent in July, Statistics Canada said Tuesday.

As has been the case for months, gasoline and other energy costs were the key drivers of the consumer price index.

The Canadian economy is struggling and homeowners will face tougher times ahead.

Canadians were given a reality check about how the global financial crisis would hit their wallets as bank executives predicted a slowdown in consumer lending.

Chief executive officer of Canadian Imperial Bank of Commerce Mr. McCaughey expects that there is going to be a real challenge in terms of the economy and the industry maintaining loan growth.

He said, he would be surprised if loan growth does not slow down across the industry and he would also expect that you would see some slowing in terms of mortgage origination.

He suggested that banks could also clamp down on unsecured lending.

Analysts have long speculated that banks are planning more steps to curb unsecured lending – such as consumer lines of credit not backed by collateral – as a way to reduce risk.

Craig Fehr, a financial services analyst with brokerage Edward Jones, said sputtering loan growth is just the beginning.

Consumers should also expect higher borrowing costs and fees coupled with tougher lending standards, particularly for those with spotty credit.

He thinks the cost of getting a mortgage could certainly rise because banks need to be compensated better for higher risk on the interest rate or on the fees in some cases.

Banks are grappling with higher funding costs in the wake of last year's sub-prime mortgage market meltdown in the United States.

With the ensuing global credit crunch now in its second year, banks remain wary of lending to each other.

That, in turn, has made it more difficult and expensive for businesses and individuals to borrow funds.

If you are considering refinancing your mortgage or a second mortgage to consolidate your credit card debt into one payment then I urge you to take action now… don’t wait for rates and fees to go up.

Go to my website http://www.joemalek.com/getstarted.html right now to apply online and start saving today!

Sincerely,

Joe Malek, AMP
www.joemalek.com