Finance Minister Jim Flaherty said on CTV’s Question Period Sunday that he is monitoring the state of the housing market and is willing to intervene in the mortgage default insurance industry again if the need is felt.
“I talk to people in the condo business and I talk to people about houses and I keep track and we’ve tightened the rules four times on mortgage insurance and if we have to tighten them again, we will,” Flaherty said. “We have to be vigilant because that market is really important for jobs in Canada.”
However, in a bit of good news for brokers who fear the government setting up further roadblocks between their clients and potential mortgage approvals, the minister also intimated that he believes the past rule tampering has helped the market achieve a soft landing.
“What we’ve been trying to manage, to the extent that governments can manage, the housing market is a soft landing that, that gradual reduction,” Flaherty said. “We’ve seen that; we’ve seen some softening in the housing market, including the condo market.”
Concerning personal debt, Flaherty indicated a similarly improving outlook.
“When you look at the debt to net-worth: As long as the housing market remains relatively strong we don’t really have a debt issue,” the minister said. “I worried about it when it came to housing, certainly, because some of the house builders and condo builders were telling me about young people graduating and buying way more house than they needed and driving up in and Audi and all that general stuff … so that worried me but, as I say, that market is calming somewhat.
“So I’m less concerned than I was.”
And homebuyers may continue to be driven to buy now rather than later, with Flaherty admitting there will be “pressure” for the central bank to raise interest rates.
“The OECD and the IMF have both said to Canada we ought to let our interest rates go up a little bit,” Flaherty said. “So there will be some pressure there to let that happen.”
No bubble here
IMF: Make further cuts to government-backed mortgage insurance