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Mortgage Broker News | 14 Nov 2013, 12:00 AM Agree 0
Once again, Finance Minister Jim Flaherty has stoked the industry’s fears by stating that the Canadian government is willing to intervene if the housing market is viewed as a threat to the Canadian economy
  • Walid | 16 Nov 2013, 10:45 PM Agree 0
    Well , municipal evaluations are going higher and overhead constructions fee are like insanely ridiculous. There is your bubble.
  • Paul Therien - CENTUM | 19 Nov 2013, 09:35 AM Agree 0
    People on this forum and others have been calling for Flaherty to regulate the interest rates on credit cards for some time now, and I think that there is a misunderstanding of what can and cannot be done. The government can regulate mortgages because they always have had their finger in that pie. CMHC, a crown corporation, is the largest insurer of mortgages, and the government provides a 90% guarantee to Genworth and Canada Guarantee. That means that they have certain levels of accountability and authority. Housing is also a much more significant contributor to our economy, and given that housing is typically the largest expense for an individual, it merits greater scrutiny by both government and media. Credit cards carry the rates of interest they do because of arrears rates, and it must be considered that the government has never had their hand in that pie. There is no risk to the government financially if a consumer reneges on paying a credit card, the bank carries the debt and 100% of the risk. If government starts to poke at credit cards and unsecured lending, it is a slippery slope.

    If we want to reduce credit card debt, the best thing is to educate the consumer and to combat our culture of extreme consumerism. The whole “keeping up with the joneses” mentality is the primary driver of credit card debt.

    As for a bubble… housing I believe will remain consistent. I say this because of two principle factors that have always been in play in the past when we have seen a steep market decline. Rates and Employment. So long as rates remain at a manageable (under 6%) level and employment remains fairly strong or consistent there is limited risk of a significant crash in the marketplace. Consumer demand for housing remains relatively strong in most areas with some markets seeing growth. The economy is doing well as compared to most other countries, and unless we see a major issue on the international stage, most indicators show that will not change. Income levels remain somewhat stagnant and they will need to do some catch up to inflation, but that has never happened at the same rate.

    Housing is front and centre for a lot of consumers because they are barraged by it in the news and by industry. The issues in the U.S. made mortgages a household concern around the world. That means that Flaherty will continue to posture and meddle as government sees fit. It might not make sense, but to the majority of consumers it gives a sense of comfort knowing that our government “cares”. To the world, it looks like our government is being proactive – even if unnecessarily. IN 2015 we may have a new government and that could change things dramatically – who knows.
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