Loans, interest and real estate markets

The following letter has been sent to Bradford West Gwillimbury media January 30 2012

At the last council meeting Councillors Simpson and Lamb expressed concern about the town’s ongoing use of debt. It was said that it currently takes $5 mil a year to service our outstanding debt. Their concerns were the potential of the real estate market having a downturn or interest rates increasing. Mayor Doug White chided them and expressed his belief that that couldn’t happen in BWG. And that people can’t buy things without going into debt.

This morning on CBC they announced that Moody’s had downgraded the ratings of Canadian banks because of their concern about the overvalued housing market and interest rates in Canada. The Globe and Mail quoted Fitch, another ratings service, as identifying a record level of consumer indebtedness as a reason for downgrading. As an added note I was also told that new house permits are down 21% from last year in BWG.

Thank you to our councillors who brought this up,  as a taxpayer and resident I too am concerned. In the United States there are any number of cities and towns that banked on growth to pay their bills and now they(delete) have half built and deserted housing subdivisions, new police stations with no police, and bridges that go nowhere because there is no money to finish them.

 Debt should be manageable, there should be contingency plans, And we should remember that it is not if there will be a downturn or interest rates will go up, it is when.

Meade Helman

Bond Head