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Old Posted Apr 7, 2012, 2:50 PM
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freeweed freeweed is offline
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Join Date: Sep 2006
Location: Dynamic City, Alberta
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Originally Posted by kwoldtimer View Post
Don't know if we're in bubble territory or not, but I do find the aggressive promotion of home equity lines of credit by the banks to be troubling, and a recipe for trouble for many people at some point.
Absolutely. But HELOCs were not the cause of the bubble in the US, and not the cause of its bursting. The other thing that is not covered in this article is exactly WHO is using these - a lot of HELOCs are being taken out by retired homeowners in Canada who've long since paid off their mortgage and have plenty of equity in their house. The absolute dollar amount stated is completely meaningless - what matters is who and how much compared to overall equity.

There's a reason Ottawa stepped in and put some regulations in place on these things. And yup, some people are gonna lose their homes over this. But that has nothing to do with a bubble bursting, and certainly nothing to do with the US bubble - because theirs wasn't caused by it. The only parallel present in this article is "house prices have gone up and I think they'll go down". Yeah... that statement applies to literally every housing market in history. Not exactly a brilliant deduction there.
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