1 June 2011
In comparison with the fourth quarter, consumers average credit card debt fell by 4% when people tend to spend more money on holiday shopping. There is no surprise here and this repeats last year trend.
This study is worrisome because in March new mortgage rules took place, limiting refinance amount for a maximum of 85% of the home value. It’s now harder to keep up with debt servicing for “habitual refinancers” – group of home owners who typically have refinanced their credit card debt back into their mortgages every two years. We might see more and more “forced sale” listings for that group of borrowers as the only option to stay above water.
We think government should switch its attention from mortgage market regulation to the consumer credit market and implement more stringent rules for unsecure credit underwriting and also limit sky high interest on some credit cards and loans.