A Stress-Free 2013

While many Canadians are probably hoping that 2013 brings them a return to a more stable standard of living, Canadian banking executives may be bringing in the New Year with champagne and caviar.

When you consider the high profit levels being reported by Canadian banks, particularly when many sectors of the economy are struggling, it seems apparent that the pursuit of profit at the expense of those that may be toiling to make ends meet is of no concern to banks. Canada’s largest bank, the Royal Bank of Canada, currently offers a mortgage rate of 5.2% for a 5-year fixed rate and 8.7% for the 25-year rate. The national average for our neighbours to the South is currently 2.8% for a 5-year fixed rate and 3.3% for a 30-year fixed rate. As the Canadian and U.S. economies are so inter-connected, why do Canadian financial institutions have such excessively high mortgage rates?

With home construction and the other spin-off industries providing a major contribution to getting the economy moving forward, it would seem the lending institutions in the United States are being more helpful in providing the needed stimulus. Are Canadian financial institutions being greedy with their mortgage rates or are there other factors to consider? Until I can be persuaded otherwise, my belief is that Canadian banks simply have disproportionate profit objectives that are best described as ravenousness.

Wishing everyone, except banks, good happenings in 2013.