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OPINION 13 Bank of Canada warns of record household debt levels We need to start reducing says Peter Watson f f f s TEVENSONWHELTON u^ w MacDONALD*SWAN LLP Does your out-of-control increasing debt keep you awake at night? It should. The governor of the Bank of Canada, Stephen Poloz, is concerned about soaring home prices and the high amount of household debt Ca­ nadians are accumulating. It keeps him awake at night. Debt can be your friend right up until the point it causes you financial harm. The current mentality is to over consume and that is made possible by easy access to low-cost borrowing. According to Statistics Canada, the main culprit for increased household debt is escalating mortgage debt. That poses a financial danger because the Canadian Real Estate Association predicts home prices will decline dur­ ing 2018. Two things are needed for a specific mortgage amount to be reasonable. The value of PETER WATSON Column your house and your ability to earn the income needed to make mortgage payments. If the value of a highly mortgaged house declines, it is unlikely that the lender will be interested in renewing that mortgage at the current level. If you and others are forced to sell your house due to financial difficulty, that will put additional pressure on what appears to be a de­ clining housing market. As for your earning power, the Royal Bank reported household debt numbers in­ creased because our dispos­ able income growth has failed to keep pace with our borrow­ ing habits. Another concern is the level of interest rates. The Bank of Canada raised inter­ est rates during 2017 and high­ er rates translated to fewer people able to service their mortgage debt. Many have suggested strategies to reduce debt but what is needed is the motiva­ tion to reduce it, and that will only materialize when enough Canadians see this as a real danger. Canadians need to consid­ er a stop to borrowing and a start to reducing debt. - Peter Watson, o f Peter Watson Investments MBA, CFP, R.F.P., CIM, FCSI, offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.peterwat- soninvestments.com. PERSONAL INJURY + MEDICAL MALPRACTICE Experienced Trial Lawyers Serving Oakville, Milton and Burlington £fiTsWLawyers.ca 154 0 Cornwall Road Suite 106, Oakville $2,500 W E I G H T L O S S G R A N T Valid For Most Weight Loss Programs Do You Have More than 20 lbs to Lose? - Apply Nô • No Cost or Fee to Apply • Approval within 48 Hours * Thousands Paid Monthly! * See Website for Application Deadline. www.weighllossgrants.org P l e a s e v i s i t w w w .w e ig h t lo s s g r a n t s .o r g for fu ll G u id e l in e s , T erm s & C o n d it io n s . | O akville B eaver | Thursday, January 25, 2018 insidehalton.com http://www.peterwat-soninvestments.com http://www.peterwat-soninvestments.com http://www.weighllossgrants.org http://www.weightlossgrants.org fffs TEVENSONWHELTON PETER WATSON £fiTsWLawyers.ca $2,500 WEIGHT LOSS GRANT Valid For Most Weight Loss Programs • No Cost or Fee to Apply • Approval within 48 Hours * Thousands Paid Monthly! * See Website for Application Deadline. Please visit www.weightlossgrants.org for full Guidelines, Terms & Conditions.