Peter Aceto on Debt, BMO & Bubbles
Here’s a sampling of his opinions…
- He called the use of credit in this country "disappointing" and a "concern for our economy."
- "We are starting to look a little more like our American friends…"
- On a positive note, "..We’ve seen for the first time in some time, the use of debt beginning to decline.”
On BMO’s 2.99% five-year fixed promo from January…
- “This is not a big time (of year) for mortgages. So if someone wants to jump the line and try and get some market share, then that’s great.”
- "The mortgage business probably isn't going to grow as much this year as it did in the past."
- "The problem…with [BMO's offer], is it teaches exactly the wrong message. It incents Canadians to go after something that looks really good (but isn’t so good)."
- "It’s the hotel California mortgage. You can check out anytime you like, but you can never leave…The prepayment options are very very low," and "you have to sell your home or die if you want to get out of that mortgage."
- "Canadians need to scrape a little bit deeper before they choose a mortgage…"
- “You will see” more deep discounting in the spring.
Aceto is naturally right about the limitations of BMO’s "Low-Rate" product. At the same time, customers will welcome BMO with open arms anytime it wants to undercut competitors by 15-20 basis points (like it did in January), restrictions or not.
On housing valuations…
- "We do talk about it a lot in the office."
- “Uncategorically, I would say no, I don’t think we have a bubble like we saw in the U.S.”
- "…We have some issues....It's not a national issue. It’s more of a British Columbia issue or an Ontario issue. Prices are very high.”
- We should have some "pause for concern.”
- “…The mortgage competition doesn’t do anything to help.”
- Condo valuations are “pretty high on top of the list of things we are watching very, very closely.”
Rob McLister, CMT