Brokers aren't ready to trust Flaherty

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A year after he imposed stricter guidelines on the housing market, Finance Minister Jim Flaherty announced Wednesday that he has no plans to further intervene. The announcement hasn’t provided comfort for mortgage brokers, though.

“He said the same thing a year ago (about the housing market) and that he wasn’t going to rescue the banks and he went and he did that,” Yuval Fish of True North Mortgage told “You can’t take anything he says at face value.”

The Canadian government shortened the amortization period and, more recently, limited CMHC’s tax-payer backed mortgage insurance in an attempt to cool the hot housing market. It was an announcement that took some brokers by surprise.

“Nobody saw the mortgage changes of last year coming because he clearly indicated he was not going to interfere,” Fish said. “I won’t be surprised if he does go back on his word (once again).”

Those changes were addressed by Flaherty on Wednesday as he shot down any fears that similar interference may be on the horizon.

"We've watched the condo and housing market closely for the past five years and as you know, we've taken four steps over the course of those years to try to calm them," Mr. Flaherty said Wednesday during the televised announcement. "There are no plans to intervene further."

Pessimism often reigns when dealing with politicians and their many problems and this case is no different.

“He’s a politician at the end of the day, he’s more concerned with popularity and votes,” Fish said. “If he feels that he needs to do it, he will do it if that’s the sentiment felt among the voters.”

Despite the mistrust, brokers are aware of a cooling market and believe Flaherty is making the right choice.

 “It’s slowing now in our area, as it does every August,” Ron Price of Dominion Lending Centres Forest City Funding told earlier this month. “I think things are going to be pretty even; I don’t foresee a lot of change, negative or positive.

“I think (Ottawa) has tightened it as much as it should.”

  • JSydneyH on 2013-08-23 4:42:43 AM

    The issue going forward will not be how to cool the market but how to prevent it from dragging the rest of the economy down when the rising rates slow the market. New construction has already started to slow; given that construction accounts for 11% of the labour market, any job loss in this sector will have a ripple effect on the rest of the economy.

    Can the rules change fast enough to save the country from a recession?

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