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(Rosemarie Gearhart)
(Rosemarie Gearhart)

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Why it's harder to get a U.S. mortgage if you're pregnant Add to ...

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U.S. lenders cast wary eye on parental leave Maternity and paternity leave is proving to be something of an issue for U.S. consumers looking for a mortgage. The New York Times reports today that lenders are looking more closely at people wanting mortgages, and whose incomes have taken a hit during parental leave. That includes even parents planning on returning to work within weeks, the newspaper said. "Now that lenders have become more conservative, they are requiring new parents to jump through more hoops to prove their income will be enough to cover the mortgage," it added.

Part of this dates back to new measures earlier this year. Though the major mortgage companies that buy most of the mortgages from lenders, Fannie Mae and Freddie Mac, haven't changed their qualifications, the "system of checks and balances" has become more stringent. Officials of Fannie Mae and the Federal Housing Administration said guidelines had not changed, and there's nothing preventing a mortgage approval if income is and will be stable. Brokers, though, said many lenders are looking at that "through an increasingly conservative lens."

Bank of Canada hikes rates The Bank of Canada raised its benchmark overnight rate by one-quarter of a percentage point to 0.75 per cent today but painted a somewhat gloomier outlook and cut its forecast for economic growth. Here's why the central bank did what it did this morning:

"The global economic recovery is proceeding but is not yet self-sustaining. Greater emphasis on balance sheet repair by households, banks, and governments in a number of advanced economies is expected to temper the pace of global growth relative to the bank's outlook in its April Monetary Policy Report (MPR). While the policy response to the European sovereign debt crisis has reduced the risk of an adverse outcome and increased the prospect of sustainable long term growth, it is expected to slow the global recovery over the projection horizon. In the United States, private demand is picking up but remains uneven."

The central bank said economic activity is unfolding largely as it expected, driven by the government and consumer spending. But, it said, the housing sector is "declining markedly from high levels," and business investment is being held back.


What troubles David Rosenberg David Rosenberg, the chief economist of Gluskin Sheff + Associates, issued another stern warning today on government debt levels. Mr. Rosenberg noted that debt-to-GDP ratios of 80 per cent or more are "a new dynamic and a game changer" in Europe and the U.S. For all the countries in the OECD, he added in a research note, general government debt as a share of GDP will hit a record 104 per cent next year, compared to 73 per cent when the U.S. recession began.

"The bottom line is that all levels of society, and across most countries in the industrialized world, have far too much debt and far too much debt-servicing costs in relation to income," he wrote. "... The problem of excessive debt leverage got worse in the aftermath of the financial crisis, not better. This is what keeps me up at night - kicking the can down the road in terms of addressing the global debt problem will only end up making the situation worse. Governments seem to believe that the solution to a debt deleveraging cycle is to create even more debt. But delaying the inevitable process of mean-reverting debt and debt-service ratios back to historical norms will be even more painful."

Goldman Sachs earnings plunge Goldman Sachs Group Inc. today cited a "more difficult" market climate as it posted an 82-per-cent drop in second-quarter profit. The Wall Street giant, stung by Britain's tax on bank bonuses and the cost of its recent settlement with the Securities and Exchange Commission, earned $613-million (U.S.) or 78 cents a share, down from $3.4-billion or $4.93. "The market environment became more difficult during the second quarter and, as a result, client activity across our businesses declined," chief executive officer Lloyd Blankfein said in a statement.

Michael Farr of Farr, Miller & Washington LLC told Bloomberg News before the earnings were released that "the clouds over the financial industry remain thick."

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