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Industrial commodities prices in China have regained some of their poise after Shanghai issued a road map for opening up and the central bank cut interest rates on long-term loans.
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Industrial commodities prices in China have regained some of their poise after Shanghai issued a road map for opening up and the central bank cut interest rates on long-term loans.
Get ready for a fresh slump in the world’s most-watched stock index, as economic growth fears spiral and the Federal Reserve embarks on its biggest policy-tightening campaign in decades.
Asking prices for UK homes rose to a new record for a fourth-straight month, though there are signs the market is starting to ease.
Hong Kong is counting on a former cop to address its growing list of headaches. Just don’t expect the new leader to solve the housing crisis -- even though Beijing has blamed the problem for social unrest, analysts say.
Hisayuki “Deko” Idekoba isn’t really impressed by his own first-year results as chief executive officer of Japan’s Recruit Holdings Co., owner of the world’s top job finder.
Feb 16, 2018
Bloomberg News
,(Bloomberg) -- Canadians are borrowing against their houses at the fastest pace in more than five years, as home equity lines of credit emerge as a preferred means of accessing funds.
Balances of non-mortgage loans to individuals for non-business purposes, secured by residential properties, a category that includes helocs, jumped 7.2 percent in December from a year earlier, the fastest annual growth since 2012, reaching a record C$230 billion ($184 billion), according to data published Thursday on the website of the Office of the Superintendent of Financial Institutions.
Borrowers can tap helocs for up to 65 percent of the value of their homes, and the funds are most commonly used for making renovations, investing and consolidating debt, according to a June 2017 report by the Financial Consumer Agency of Canada. “Houses are becoming piggy banks,” said Paul Gulberg, a Bloomberg Intelligence analyst. It’s “either greed based or need based.”
Helocs can also be a red flag for policy makers.
It’s a type of borrowing that may contribute to increased household vulnerabilities because it typically doesn’t require the principal to be repaid on a fixed schedule, the Bank of Canada said in its most recent financial system review. About 40 percent of heloc borrowers don’t regularly pay down the principal.
Of total non-mortgage loans secured to individuals for non-business purposes, those secured by residential property represent about 46 percent, the data show.
Compared to other loan types, such as auto loans and credit cards, rates on helocs are typically cheaper, making them more attractive to consumers. They also tend to be more sensitive to fluctuations in borrowing costs, because they’re usually tied to prime rates.
“It’s a rising risk factor because it’s something that reprices more rapidly than a typical mortgage pool,” said Gulberg, adding the risk is rising “in conjunction with the fact that it’s fueling overall consumer credit, which is considered to be an issue.”
Canadians have about 3 million heloc accounts and the average outstanding balance is C$70,000, the FCAC said, which also warned heloc borrowers are increasingly vulnerable to rising interest rates and a housing market correction.
(Corrects second paragraph to show helocs are included in the category of loans secured by residential property.)
To contact the reporter on this story: Erik Hertzberg in Ottawa at eschmitzhert@bloomberg.net.
To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Erik Hertzberg, Stephen Wicary
©2018 Bloomberg L.P.