Five reasons to love rising interest rates

The Globe and Mail- With the Bank of Canada poised to raise interest rates as early as June, nervous borrowers are bracing for the end of cheap money.

Big disaster, right? Hardly.

Sure, consumers carrying onerous amounts of debt will feel the pain when rates climb from today’s ultralow levels. But for others – savers, seniors and fixed-income investors, for example – higher rates can’t come soon enough.

Rising rates might even restore some sanity to segments of our economy that have gotten drunk on all the easy credit. So, with banks already ratcheting up mortgage rates and bond yields creeping higher, let’s take a deep breath and focus on the positives.

Here are five reasons to love rising interest rates…

Five reasons to love rising interest rates – The Globe and Mail

Report warns of housing bubble threat

The Globe and Mail- Canada’s housing market is looking increasingly like a bubble in the making, Edward Jones said today in a report.

“Canada’s housing market escaped the recent severe downturns in the US and other countries. However, today’s conditions in Canada share some characteristics of those countries prior to their downturns, leading us to take a cautious stance on housing investments,” wrote analysts Kate Warne and Craig Fehr, adding that Canadians should prepare for “the possible impact” of a housing downturn.

An asset bubble forms when cheap money causes speculators to flood into a market, driving prices higher despite weak underlying fundamentals. With unemployment high and the economic recovery on shaky ground, the rapid recovery of Canada’s real estate market has many economists concerned that prices could head lower. Prices have gained almost 20 per cent in the last year, as a lack of inventory and easy access to cheap money has propelled Canadians toward home ownership…

Report warns of housing bubble threat – The Globe and Mail

Canada’s brewing debt storm

The Globe and Mail-Canadian borrowers are fast approaching a day of reckoning.

Lured by cheap money to buy up, buy in, expand and make over, families have pushed credit levels to a record high.

Now, mortgage rates are beginning to creep up and the Bank of Canada is poised to retreat from the record-low interest rates it adopted to fight the recession and spur recovery.

The end of the free-money era has left consumers more vulnerable than ever, and those who threw caution to the wind could soon face costs they can’t handle.

Household debt has surged three time faster than income in recent years and now stands at a record high of more than $1-trillion. Put another way, Canadians owe about $1.47 for every dollar of disposable income. Even more remarkably, they took on more debt during the slump – a first for a recession – because borrowing was so cheap…

Canada’s brewing debt storm – The Globe and Mail

Easy credit, soaring prices raise new housing fears

Financial Post- Canadians are buying homes at a blistering pace, binging on new debt. But all that cheap money can come at a high cost…

Easy credit, soaring prices raise new housing fears – The Globe and Mail

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