Broker sends warning to Ottawa

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Rumblings of further mortgage tightening are already frustrating brokers, who argue they will unfairly affect the wrong type of buyer.

“We’ve already seen the impact of the most recent changes and young professionals are really struggling to get into the market,” Dianne Smith of Invis told “The housing and mortgage business is really dependent on first-time buyers and they would be the most affected.”

According to the Financial Post, the federal government is looking at ways to cool the housing market and is considering an increase to the minimum down payment requirement.

“They are definitely looking into this but it doesn’t mean that they will do it,” an anonymous source told the Post.

Another source confirmed the government is considering it, while a Department of Finance source denied that Ottawa is considering raising the minimum down payment from five per cent.

But would the move make sense? The economy needs the stimulation that a rate cut provides, with the government, say analysts, unwilling to stimulate the economy with the more-usual infrastructure spending favoured by past regimes.

The talk of further restrictions will certainly ramp up in the wake of the Bank of Canada lowering the target for its overnight rate to ½ per cent and buyers take advantage of record-low rates.

Still, brokers argue any move to hike minimum down payments will not rein in the ever-increasing housing prices because they will affect first-time buyers; buyers who aren’t known to purchase the million dollar homes that are driving up the average housing price in Canada.

“I can’t see (the government increasing the minimum down payment) as fair; there has got to be a better way,” Smith said. “I just don’t think it’s fair to punish the market segment that is so critical to the housing industry.”

  • Ray Azar on 2015-07-17 9:47:28 AM

    The recent increased demand is fueled by foreign investors and new immigrants and they are not the 5% buyers. This will only decrease the average Canadian family's possibility to own a home. While we are at it why don't we sell the whole country to foreign investors. I think the federal government should impose a ownership limit on foreign investors to resolve the situation.

  • David Neville on 2015-07-17 10:00:50 AM

    The Feds seem to only be able to see 2 markets...Toronto and Vancouver. Don't forget that policies made for those 2 markets affect everyone. If they are concerned, enforce restrictions specific to them alone. Better yet, let a free market economy rule. We have gotten through tough times before in this country without government intervention. We can do it again.

  • Jerry Quigley on 2015-07-17 10:01:45 AM

    There's also discussion of reducing the maximum amortization to 20 years. That would be the most effective but on homes priced more that 10% above the median home price for that particular real estate board market.

  • Dave on 2015-07-17 11:54:59 AM

    Start laying heavy taxes on foreign buyers. Government is letting them launder money here at no cost. Over a trillion dollars left China in the last few years, a good chunk is ending up in Toronto and Vancouver. These foreign buyers use our real estate to park cash, real simple. I hear stories from lawyers that will prove this. Meanwhile im being asked by lenders to explain a $4000 deposit in my clients account because of AML. What a joke.

  • Bob on 2015-07-17 2:21:46 PM

    Ray, I think the sell-off has already been happening for years now. Our natural resources are owned by foreign corporations, canadian housing is in disaster waiting to unfold, dissolution of canadian Wheat Board. The disaster is not necessarily that our lives are dictated by corporations, the problem is that they are foreign.

  • Bob on 2015-07-17 3:04:35 PM

    US fed will be raising rates by the end of 2015. Yellen has mentioned that since January already 15 times. Our bond will follow, no choice there. There will be another rate decrease thou in September according to non-bios economists such as Madani. Let's see that. All this low rate environment only pours gasoline on real estate market and pushes it closer to the end game no matter if Harper/Poloz wants to deny it. CMHC have also passed a circulation to the real estate broker network NOT to disclose any foreclosures in case they happen rather produced lies to protect banking system than consumer. Job market is on decline too and our people will soon start loosing ability to service their obligations. Our real estate market needs only a small catalyst to make it crash and once that happens I wouldn't be surprise to see Japan style recovery that will last for decades. It seems, our government wanted to drawn Canadian in debt and they have succeeded. After the crash the debt will remain, unless bankruptcy. For millenias, I would suggest carriers as Trustees. For stock market investors sell off all stocks like Genworth, Home Capital, Street Capital, etc, those securities are toxic and those are the once US investor is short selling them to make substantial gains.

  • Kent Farnsworth on 2015-07-17 3:05:19 PM

    A move like that would all but kill the first time homebuyers market right across th country. But because it's our ingenious leaders making these decision, I really wouldn't put it past them. Honest to God, anyone that votes conservative in the next election has to have rocks in their heads!

  • Bob on 2015-07-17 4:06:14 PM

    Kent. the problem is that there is really nobody else to vote for. Liberals being known as incompetent fools will not be voted for . . . . everyone knows, and then to put NDP in to the driver seat is like putting kindergarden kid in to high school.

  • Kent Farnsworth on 2015-07-17 4:40:09 PM

    The conservative government has taken too much control of the mortgage industry. They have completely ignored the rest of Canada and only focused their attention on the massivly growing real estate markets. They have not even considered looking at the changes they have made to avoid a catastrophe in the other parts of the country where the real estate market has been struggling for years. I'm voting NDP simply becasue if things continue the way that they have been under this government, I'm going to be forced to close my doors and move on to another industry, or worse yet, go work for a bank. I understand what you are saying in regard to the NDP being complete newbies, but I just can't see how it would even be possible to make so many more worse decisions than this Harper government has made over the last 7 years. Not only have they completely decimated my business here in NB, but they have completely changed the internation opinion of our country that I used to be so proud of. I wouldn't vote liberal, simply because they aren't focused where they need to be on many different levels, and Trudeau is practically a child that has no business running a country. Besides that, I believe that the liberal government is every bit as corrupt as the conservative government. It is time for a change. Time to give somebody else a chance to prove themselves. That worst that will happen is that they get voted out in 4 years and we then go back to the same old same old.

  • Bob on 2015-07-17 4:44:38 PM

    Right on! but he does really have a nice hair cut, don't you think so?

  • Kent Farnsworth on 2015-07-17 4:51:34 PM

    lol :) Trudeau? Yes, he would fit right in with the surfers in Cali

  • Bob on 2015-07-17 5:00:41 PM

    By the way Dave the conditions of real estate in "pacific ring of fire" has been all devastated by dirty Chinese money. Canada, Australia, N. Zealand, Antarctica (just kidding). Apparently only 2% our government admits, while the rest is because of. . . . . ummmmm. . . Martians.

  • Joel on 2015-07-17 5:11:44 PM

    Have you heard? Mortgage rates went up in US yesterday.

  • not a broker on 2015-07-17 10:24:22 PM

    David - Re: free market economy. Good idea. Abolish CMCH.

  • Jerry Quigley on 2015-07-18 9:05:23 AM

    and you guys are handing out financial advice..... oh ya, it's free and worth every penny!

  • Joel on 2015-07-18 1:28:25 PM

    It doesn't seem as financial advice, Jerry, rather than opinion. It is expected that some will not like or disagree with it. But after all "Je suis Charlie", remember?

  • Warren Ross on 2015-07-19 7:04:28 PM

    If the government is serious about managing housing risk, its time to set up different insurer rules in each province to reflect the risk in that region. There is no one size fits all answer.

  • Paul Smith on 2015-07-20 2:56:48 PM

    Housing risk management? Is there really a need for that anymore? Democratic market forces - recession, asset deflation, job losses, interest rate hike, or simply "reboot" will take care of itself. Regulation go hand in hand with media billboard propaganda, CREA real estate marketing pump campaigns, government policies targeted greater Canadian public's sentiment in home ownership. It has been well regulated collective effort resulting in housing bubble that most of us would still like to deny. To regulate now would only mean to socialize losses following correction while gains were kept privatized, typical behaviour of financial illiterate suckers. 10-30-65% overvalued, or simply INFLATED values is good evidence where we are as a society. Everyone should pull out calculators at this stage and take away the fat to see where 70% of Canadian homeowner with all eggs allocated in a single asset will end up when this neoliberal paradise is over. No savings, real estate values below mortgage amounts, trapped in housing cage. One think remains a mystery to me that some people must really be dumb trying to buy now. I agree with Bob. Canadians really are drowning in debt and the only one who benefits, is our government. Taxation of 10-30-65% overvalued asset (such as land transfer tax) is collecting 10-35-65% more revenue.

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