What to know about debt and mortgage securitization
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The federal government is proposing to increase the maximum debt limit from $50,000 to $100,000.
It’s a move that could affect some Canadians and could affect many more.
The government is looking at an increase to the limit to help reduce the risk of financial markets crashing when the economy slows down.
It would be one of several measures in the government’s fiscal 2018 budget.
“The Government of Canada is committed to maintaining the stability of the Canadian financial system by reducing the federal debt limit and ensuring that debt service remains affordable and sustainable for Canadians,” Finance Minister Joe Oliver said in a statement.
The federal debt is currently set at $5.4 trillion.
But the government recently announced a new policy that would bring the total to $60.5 trillion, or nearly double the current debt limit.
The budget also proposed increasing the interest rate for a new series of mortgage bonds to 2 per cent.
The new interest rate would be used to pay down the federal deficit over the next five years.
“To date, we have lowered the interest rates on existing debt and secured debt by more than $100 billion, bringing the federal government’s debt to a record low,” Oliver said.
“Our government is committed in this budget to protecting Canadians from the financial impacts of economic downturns, and providing a safe and secure home for their children, spouses and families.” “
The government announced the plan to increase borrowing limits in the spring, as the economy recovered from the devastating wildfires in B.C. It also announced a plan to raise the limit of mortgages to $1.6 million and the limit on home equity loans to $2 million. “
Our government is committed in this budget to protecting Canadians from the financial impacts of economic downturns, and providing a safe and secure home for their children, spouses and families.”
The government announced the plan to increase borrowing limits in the spring, as the economy recovered from the devastating wildfires in B.C. It also announced a plan to raise the limit of mortgages to $1.6 million and the limit on home equity loans to $2 million.
The increase would take effect on Sept. 1, 2019.
The policy has already prompted concerns that it could hurt homeowners who have not yet had the opportunity to make a decision about the purchase of a home.
But a number of experts are also urging the government to ease the restrictions.
“This is a reasonable step to take,” said Robert Siewert, a senior economist at the Bank of Montreal.
But this is not a crisis, and there are still some opportunities for the economy to bounce back. “
That is a concern.
But this is not a crisis, and there are still some opportunities for the economy to bounce back.
If we can find some way to mitigate the impact of the increase, I would support it.”
The budget was released at the end of May, and was the third in a row that the government has released a fiscal 2018 plan.
Oliver and Finance Minister Bill Morneau announced the budget in May, which included a number plans aimed at reducing the government debt.
But it’s the new measures announced Tuesday that are likely to be most significant for those affected.
The announcement would increase the limit from the current $50 million to $150 million, a measure that the Conservatives say would be necessary to “maintain the stability” of the economy and protect taxpayers.
The change would bring Canada’s debt-to-GDP ratio to 158 per cent, up from 142 per cent in 2018.
“We are looking at a reduction in the debt limit of roughly $150 billion over the following five years, so the impact on the federal budget is likely to come in the form of a decrease in the value of Canadian Treasury bonds, which would be a reduction of $50 billion over that period,” Oliver wrote.
“In addition, we are looking to increase government revenues by approximately $2.6 billion over those five years.”
While the new measure is designed to keep the economy “stable,” it could impact Canadians’ ability to take advantage of the government programs and services that are available.
The Treasury Board of Canada Secretariat has previously said it is currently forecasting a $2 billion increase in debt servicing costs over the coming years.
The move could have a significant impact on people’s ability to access government benefits, such as health and child care.
“I think the fact that the Government of Canadians is now contemplating such a large increase in interest rates is a big one,” said Ian Shepherdson, chief economist at CIBC.
“It would be good for Canada, but it could also be bad for Canadians.”
“It will hurt people who have mortgages, who are in debt, who don’t have a bank account, and who are looking for ways to get out of debt,” said David MacKay, chief executive of the Bank Rate Group.
“What we don’t want is to see Canadians go through this and have their savings and retirement assets all gone.”
With files from CBC’s Andrew Ference, Global News, C
The federal government is proposing to increase the maximum debt limit from $50,000 to $100,000.It’s a move that could affect…