There are two items of interest in the Business Brief put together by the Vancouver Sun, both of which are pertinent to Canadian homeowners weighing issues of debt consolidation.
The Sun reports Liberal leader, Michael Ignatieff, warning that “very high levels of consumer debt” and rising interest rates will put the “squeeze on the middle-class family'”. Noting an uncertainty as to whether the economic recovery is stable, Ignatieff told an interviewer, “We’re going to have to make judgments about whether stimulus may be necessary” next year. For his part, Canadian P.M., Stephen Harper, has gone on record saying his government “will end a second year of emergency stimulus in March and balance the budget within five years.”
The primary economic stimulus, both in Canada and abroad, has been historically low interest rates coupled with deficit spending. The Bank of Canada has, of course, already begun a cautious course of incremental rate increases – most recently on July 20th – which will gradually raise interest rates for consumers and homeowners.
Homeowners paying high interest rates on credit card debt and other loans may wish to consolidate such debts by leveraging their home equity – equity which continues to rise in most instances, as the Vancouver Sun also cites forecasts from the Canadian Real Estate Association predicting higher than expected home price increases, even amongst an overall decline in house sales as compared to this season last year.
Tapping into home equity in order to consolidate debt under a secured line of credit will help position homeowners to manage their household budget when governments inevitably turn off the surplus tap and interest rates rise.
