Finance Minister Jim Flaherty’s comments that the full impact of the government’s mortgage rule changes “have yet to be felt,” have some brokers scratching their heads.
“What more does he wants?” asked Paul Sobieski, a 30-year veteran of the industry who works with The Mortgage Group in Vancouver. “Home sales in some of the country’s hottest markets are at their lowest in 20 years already.”
Earlier this week, Flaherty said in a television interview that it was too early to judge the effects of the government’s move in July to limit consumer access to mortgages in an effort to avert a debt crisis. His deputy, Michael Horgan, was also quoted as saying it was “too early to make a direct link” between the housing market slowdown and the mortgage rule revamp.
“That's what scares me, the full impact has not been felt yet,” wrote one MortgageBrokerNews.ca reader in response to Flaherty’s comments. “I think there is a bigger slowdown coming and we will run right back into recession, by February 2013 or earlier.
Mortgage brokers also argue the finance minister’s statements somehow bolster their point that the market was already slowing down before the feds announced the new mortgage rules. More urgently, they say, further efforts to cool the market run the risk of damaging the economy.
“The government was putting out a fire that was already dying,” said Sobieski. “The industry usually experiences a five year upswing and then flattens for about three years we had been up for an unusually long 10 years and were headed for a correction anyway.”
For instance, he said, home prices in the previously hot Richmond, B.C. area have gone down 20 per cent compared to last year. Broker business in B.C. has taken a similar hit for many industry players, falling by as much as 35 per cent.
“I think Flaherty should back off now,” Sobieski said. “Further tampering could lead to a recession.”