Broker debate over Flaherty's legacy

Broker debate over Flaherty's legacy

Broker debate over Flaherty Brokers are of two minds following Finance Minister Jim Flaherty’s announcement Tuesday that he is stepping down; some commend his initiatives while others are happy to see him go.

“I’m ecstatic about it … I hope his successor will serve the people of Canada and not the big banks,” Nicholas Hamblin of Ideal Mortgage told MortgageBrokerNews.ca. “Mr. Flaherty has been floating a red herring for several years about the debt levels in Canada and he attacks the most affordable, most commonsensical, best secured instrument in the banking portfolio (mortgages) while he leaves the banks to give unsecured lines of credit and loans and high interest credit cards.”

The Minister resigned Tuesday, stating the decision was made with his family.

Flaherty was unpopular during his tenure among brokers for instituting policies that slowed the market and made it harder for many clients – especially first-time and self-employed buyers – to attain a mortgage.

Meanwhile, some view his restrictions – which include limiting the price of homes eligible for CMHC insurance and shortening the amortization period to 25 years – as necessary measures to reign in a market that could have spiraled out of control.

“Flaherty had tightened the mortgage rules several times and in my opinion (it was) a prudent approach … to ensure that Canada (would) not follow the footstep of the American style financial crisis in 2008,” Angela Wong-Liao of Invis The Money Lady said. “But obviously the tightened mortgage rules affected my mortgage business directly and indirectly.”

Wong-Liao, however, believes enough has been done and hopes his successor, Joe Oliver, doesn’t take any further action.

Still, not everyone believes his measures were completely necessary.

“I don’t believe there was a risk of (a housing crash similar to the one in the United States),” Hamblin said. “The banks here were highly regulated in the first place and the banking system is completely different; the banks in the US were giving out mortgage for a handshake … that was not happening in Canada.”
 
 
29 Comments
  • Paolo Di Petta | dipettamortgage.com 2014-03-20 11:28:19 AM
    I think the misconception here is that the tightening of rules was done to hurt Canadians and help the banks, when infact, it was just the oppposite - it was to save Canadians from their appetite for unsustainable debtloads and to stop the banks from cashing in on that appetite.

    I don't agree with a lot that Flaherty did, but the tightening was done in a way that had the least damaging effect on the overall economy.
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  • Leon Tucciarone 2014-03-20 11:39:55 AM
    Only one thing is certain - Government intervention in areas of economic policy not traditionally intended for governments always lead to complex after effects. Some good (only initially), but mostly bad (as shown throughout historical data time and time again).
    Time will tell, won't it? We can speculate and comment all we want. I think he's set himself up nicely for some great opportunities in the private sector. Left at the right time for himself and what the next guy will find in the bag of goodies left behind will be known in the next 12 months. Either way, Canadians do and will pay the price ultimately,....
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  • Paolo Di Petta | dipettamortgage.com 2014-03-20 11:57:16 AM
    @Leon - good points, but many people who claim to be against government intervention in economic policy (especially after the B20) are also the same people who support the CMHC.

    Like it or not, the CMHC is also a government intervention.

    I generally don't support government intervention (including the CMHC). But the reality is, that it's there and impossible to completely eliminate.

    Also, I don't think this is any worse than what Carney left for Poloz. All the big boys made a mess and left it for someone else to clean up.

    This is an industry-wide issue. I talked about this in my blog in june of 2013 http://mrt.gs/MtgOvrBrd
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