It was reported in the Globe and Mail that MBNA has increased their minimum payment by 66% in an effort to reduce their exposure to the record debt levels that Canadian’s carry and not to save their clients money by paying less interest as they claim. You can be sure that other issuers will follow, especially American Issuers as they struggle with their own operations in the USA.
For many people this will be enough to put them into a negative cash flow. So more than ever people will need to refinance and there will be less concern of how much the penalties are more concern about increasing cash flow.
There may also be a concern of rising interest rates that have prompted them to be pro active on this issue but while there will be higher rates in the future I doubt they will be immediate as there are so many negative things happening in the world today that runaway inflation in Canada is not likely to occur and they are still running a risk of deflation so the risk of quick increases is minimal.
M.O.S. MortgageOne Solutions Ltd.