Canadians Realistic About Household Debt

In the past decade consumer confidence in Canada was much higher than what would be expected based on certain household fundamentals including Real Disposable Income Growth, Debt-to-Income Ratios and Consumer Capability Indices. It appears that pre-2008, consumers were confident they could increase and manage their household debt when indicators pointed against this.

Then, since the global financial crisis of 2008, Canadian consumers have become more realistic about their debt. Yes, they continue to borrow; however, the pace of that borrowing has slowed down. This change in mindset is happening during a time when their capacity to manage their debt has increased.

A recent report by economist Benjamin Tal of CIBC, analyzed this new trend on seven household fundamentals. He found that as of the second quarter of 2011, the Consumer Capability Index was back to the level seen before 2008, with the gap between confidence and capability narrowing notably, relative to the wide gap seen during most of the decade. This improvement in the capability index was not due to a strong growth in income but reflects the fact that while the level of the debt-to-income ratio is still rising, the speed at which it is, in fact, slowing.

"The key here", Tal wrote, "is the notable softening in the pace of growth in personal non-mortgage credit which is currently expanding at the slowest pace since the early 1990s. In fact, the ratio of consumer credit to disposable income has been stable over the past year."

According to the report, other factors contributing to the recent improvements include:

1. A higher savings rate which, while easing lately, is still double the rate seen before 2008
2. Personal bankruptcies are down
3. Relatively low and stable debt service costs
4. A stabilizing long-term unemployment rate at a relatively low level

"While consumers will continue to take advantage of historically low borrowing costs," Tal said. "The practical implication of their more realistic approach is that spending in the near future will be slower but more balanced growth as it will be based on fundamentals as opposed to wishful thinking."

as per TMG website

Down Payment not Required

You read the ads. No Down Payment.  What does this mean?

First of all, in most cases to not have a down payment you need a excellent credit history.  Which means you pay your bills on time and have income.

Next step is you need to be able to borrow the down payment.  The ways in which you can borrow are:
personal loans
lines of credit
credit cards
grants as long as not involved property purchase transaction. Example cannot be a builder loan.

The easy step is to call or email so we can set up a time to go through an application and see if you qualify.  This can be done over the phone or person to person.  Which ever is more comfortable for you.
If it is person to person then I usually meet with you at your home, but it can be at the library, coffee shop, your office, restaurant, etc.

If you are an outdoor type of person I enjoy meeting my clients at a park. Especially on a nice day.  I even bring the coffee. 


Angela Kroemer Mortgage Professional
1.888.679.0190
akroemer@mortgagegroup.com
www.comoxvalleymortgagestoday.com