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Forget about Mortgage Rules! What about Unsecured Debt?

10 April 2013

Lord knows the government has done enough interfering with the mortgage rules. Yes, many of them have been necessary and intended to save us from ourselves, but one has to wonder if the government’s efforts are completely right on target. No, our debt situation is not good. Yes, something should be done about it. But to some, it doesn’t make sense that the government continues to try and keep us from taking on “good debt” while nothing is being done to stop us from taking on the worst kind of debt of all – unsecured debt that comes largely in the form of credit cards.

“Everybody wants everything today,” says Joe Walsh, a mortgage broker. “I don’t see the government doing a lot to stop credit card debt, what with the loose approvals and people walking around with five or six cards. It’s a different world now, and credit cards are too powerful a money maker for the banks.”

But just how different is it? And what does that have to do with credit card debt? Walsh says that it goes back to the problem of wanting more than you need.

“Our parents paid off their mortgage when they turned 55,” Walsh says, referring to the recent CIBC survey that shows most Canadian homeowners feel as though they won’t pay off their mortgage until the age of 57.

“But then again,” Walsh continues, “they weren’t buying bigger and bigger homes every five years. They would keep their starter homes. The first thing I saw as a mortgage broker today is people telling me ‘I need a four bedroom home for my two kids.”

Walsh understands that the mortgage rules were tightened to help people from getting in over their heads. Now, he says, he just wants to see the same thing happen with unsecured debt.

“It’s not an easy, simple fix,” he says. “The government has done what was needed to control mortgage debt through the regulations that have been introduced. But now the pendulum has swung far enough.”

What do you think? Should the government step in and force tighter rules on credit cards and other types of unsecured debt? What measures do you think should be brought in, and how do you think Ottawa should do it?

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