Credit expansion continues to be primarily driven by
borrowing by the household sector, mainly for the purchase of housing.
In Britain most of the debate around risk has ignored food and fuel in favour of finance: reducing high levels of
borrowing by households and the government and finding ways to stop banks from courting another disaster.
Not exact matches
Previously, the Bank of Canada hinted it might raise rates to curb the
borrowing binge, but in March it abruptly changed tack
by affirming the
household debt - to - income ratio is «stabilizing near current levels.»
By borrowing: the country's
household debt to personal disposable income ratio has climbed to a record high of 152.98 %, according to Statistics Canada.
What if the Federal Reserve and U.S. Treasury stopped trying to stimulate the economy
by encouraging more
borrowing with «quantitative easing» and instead «dropped money from helicopters» into
households» accounts?
The MPC launched the Term Funding Scheme to make sure that the lower levels of interest rates now set
by the Bank of England are reflected in the costs commercial banks charge
households and companies to
borrow funds.
If a central bank eases monetary policy, it stimulates the economy, largely
by encouraging
households and companies to
borrow more and pushing up the prices of many types of financial assets.
If the state funds these unproductive workers
by borrowing at repressed rates from
households, or
by otherwise raising direct or hidden
household taxes, this way of managing unemployment will indeed serve simply to prevent or even reverse the adjustment process.
Over time this means that
households will retain a growing share of China's total production of goods and services (at the expense of the elite, of course, who benefitted from subsidized
borrowing costs) and so not only will they not be hurt
by a sharp fall in GDP growth, but their consumption will increasingly drive growth and innovation in China.
The Fed has a dual mandate to maximize employment and stabilize inflation, which it tries to achieve primarily
by pushing up or down the federal funds rate, the benchmark short - term financing cost for banks that influences a wide range of
borrowing rates for
households and businesses.
As has been the case over the past five years, credit expansion in recent months has primarily been driven
by household sector
borrowing, especially for housing.
While such a rate of expansion will clearly not be sustainable in the longer run, there is little sign at this stage that the appetite for
borrowing has been restrained
by the recent increases in interest rates, even though the higher debt burden of
households might be expected to make them more responsive to interest rate changes.
This week: the US administration continues its anti-trade rhetoric, China grows a little faster than expected, Australian employment figures underwhelm, and the RBA seems unperturbed
by household borrowing...
That pledge, meant to stimulate the economy
by encouraging
households and businesses to
borrow, hasn't had the desired effect so far.
While most of this
borrowing has been used to finance the acquisition of dwellings, including
by investors,
households have also increased their
borrowing to finance consumption.
Longer - term growth in
household borrowing has been encouraged
by several factors.
Households have increased their
borrowing by more than interest rates have fallen, an outcome consistent with the developments discussed in the previous section.
Furthermore, demographic changes have augmented the number of younger
households, which
borrow against future earnings as they begin to establish families and careers, as well as the share of retired
households, which spend beyond their current incomes
by gradually reducing savings and selling assets.
Take the oft - repeated comparison of a national economy with
household borrowing, typified
by the idea that a usually left - wing government «maxed out the national credit card».
Or he's a responsible and fair - minded chancellor, making sure (he hopes) that Britain is living within its means,
borrowing only for capital spending and nothing else
by the end of this Parliament, upping Labour's deficit repair job
by 60 per cent, adding # 40b to the fiscal consolidation and protecting the state pension and poorer
households» child tax credits into the bargain.
State Comptroller Tom DiNapoli's Republican challenger, Harry Wilson, Wednesday used the Senate's passage of the state budget as an occasion to renew his ongoing attacks on what he called a «secretive
borrowing scheme» advocated
by DiNapoli and estimated it will lead to $ 1,300 in extra property taxes on the average
household.
Over the next 6 years,
borrowing per
household will increase
by over # 20,000.
«Sometimes it's safer to have the government
borrow more, backed
by all future taxpayers, than to push individual
households to
borrow by tempting them with very low rates.»
• Growth in
household debt slowed to 0.9 % in the first quarter, driven
by a slower rate of
borrowing in consumer credit and mortgage loans, Statistics Canada said Friday.
The average
household now pays $ 900 a year for the privilege of
borrowing money
by using a credit card.
In the meantime, make sure everyone is contributing to the
household by making meals, throwing in money for grocery bills and paying for gas if they
borrow your car to run their own errands.
The strong expansion of
household spending, encouraged
by a prolonged period of historically low
borrowing rates, has created concerns over Canadians» record - high debt loads.
As CIBC economist Avery Shenfeld noted recently, much of the growth in
household borrowing is coming from those who already have high debt burdens, not «less indebted families getting drawn to the punch bowl
by the promise of low [interest] rates.»
However, the bank's statement offset the positives
by pointing to potential threats: weakening oil prices that drive down inflation and the significant risks of high
household debt accumulated during years of low
borrowing rates.
More importantly, says a Harvard study, «The current rate spread is an important influence on mortgage choice, as would be implied
by a model in which
borrowing - constrained
households seek low rates in order to maintain the level of current consumption, or to increase the size of the house they can buy when constrained
by bank limitations on mortgage interest - to - income ratios.»
NY Fed: Household debt rise marks a «turning point» —
Households increased their debt load in the third quarter
by the largest amount since early 2008, according to the Federal Reserve Bank of New York... (See Fed report:
Borrowing returns)
The expansion in the housing sector was accompanied
by an expansion in home mortgage
borrowing by US
households.
As he cites from the US Federal Reserve's Report on Economic Well - Being of US
Households in 2014:, «Forty - seven percent of [Americans] either could not cover an emergency expense costing $ 400, or would cover it
by selling something or
borrowing money.»
Some 70 percent of students graduate from college today with debt, and it's not just young
households burdened
by it; in many cases, middle - aged consumers are shouldering the debt, either because they've
borrowed on behalf of their kids or they went back to school themselves and are paying off their own loans.