We are the first to agree that current levels of consumer debt are too high and need to be curbed. However it seems that the Government is focusing solely on the Mortgage Market. There are a number of reasons why this is a wrong!
First Mortgages are secured against an asset – real estate. If mortgage levels are rising, that means that consumer’s asset levels and net worth must also be increasing. At the same time, lenders scrutinize a borrower’s income, ability to repay, their credit worthiness, and the asset itself.
Now take credit cards! Lenders just mail applications at will – I get two or three free credit card offers every week. Some even send blank cheques! And these lenders even mail card applications to students with no income! Also, these lenders don’t even care what you spend the money on. Now that is irresponsible.
I was at a movie over the weekend and there was an ad by our Government – go back to school and we will lend you the money. One of the biggest problems with young people today is student loans! And the Government is trying to hook young people on borrowing more. Yes they will give you money to go to school – no income checks, credit checks, or questions asked – just get accepted into school. Now that is irresponsible too!
So why are Governments on the war path against Mortgages when there are bigger consumer debt problems for them to solve?? I guess there is more money to be made for banks in credit cards and guaranteed student loans than mortgages!!