CAAMP returns to Ottawa for talks

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CAAMP leadership will be talking to bureaucrats and politicians in Ottawa early next week in yet another effort to raise the red flag on tighter mortgage and lending regimes.

“Our Chair, I and our chief economist will have a series of meetings in Ottawa on Wednesday with both public servants and politicians to discuss the findings of our most recent research,” Jim Murphy, president and CEO of CAAMP told MortgageBusinessNews.ca yesterday. “We will obviously discuss the government’s recent changes along with the need to maintain a healthy housing and mortgage industry in Canada.”

Last month, CAAMP released its Annual State of the Residential Mortgage Market in Canada report, which indicated that majority of Canadians have been handling their debts and paying down their mortgages “comfortably,” but also raised concerns that the mortgage rule revamp implemented by the government in the summer has shut out many first time homebuyers from the market and caused a drop in housing market activity.

This is a sentiment shared by many brokers who argue that the mortgage rule changes were ill-timed since the hot housing market was already moving towards a price correction.

Mortgage professionals also warned of a possible snowball effect wherein a reduction in activity at the entry level will create difficulty for those who wish to sell their homes and move up in the market, creating a slowdown in upper segments of the housing market as well.

“Our concern today is the number of growing first-time buyers who are now unable to get a mortgage,” Murphy told MortgageBrokerNews.ca earlier this year. “We worry that this is having a dampening effect on what was already a cooling market, we hope policymakers will give some thought to addressing the needs of this key sector.”

By contrast, Finance Minister Jim Flaherty has expressed little to no anxieties about a housing market slowdown, even as StatsCan reports a record downturn in the housing sector for the third quarter.

“Less demand, lower prices, modesty, in the housing market are much better for Canadians than a boom followed by a bust,” Flaherty told reporters. “So I’m all for a soft landing.”

However, Murphy is expressing confidence that the CAAMP report will help to flesh out the picture for lawmakers.

“The federal government is always interested in CAAMP’s research,” he said. “It provides critical and credible information on the overall mortgage market and trends.”
 
 

  • Len Lane on 2012-12-06 4:57:51 AM

    And this is the reason we need a national organization, one collective voice to be heard in Ottawa.

  • Christopher on 2012-12-06 5:16:35 AM

    I don't have a problem with a longer amortisation on an appreciating asset, but I do think GDS should be reborn at 32% and TDS limited to 40%.

  • Paolo Di Petta | dipettamortgage.com on 2012-12-06 6:07:37 AM

    I may not have the popular opinion behind me on this one, but I think CAAMP's stance on the mortgage rule changes is completely wrong.

    The rule changes were made because the Canadian housing market was extremely overheated (and still is, but to a lesser degree). Those measures were taken to insure long-term sustainability of the housing market.

    The only thing this effort by CAAMP seems to be concerned with is short-term growth of the mortgage industry. All this will do is continue to facilitate people repeatedly refinancing to pay off the out-of-control debt they keep racking up, when instead they should focus on cutting back on frivolous expenses.

    Also, I don't buy the "First-time home buyer's" argument - and instead will counter back with a reason the rules SHOULD be in place: FTHBs need such a high down payments because in recent years home values have skyrocketed due to low interest rates and the previously lax mortgage rules.

    When you give people EASY access to MORE, CHEAP credit, they tend to use it. That access to money has artificially increased buyer competition in the housing market, driving up prices. THAT is why new homes aren't affordable to FTHB's.

    This simply can't go on forever - interest rates can't keep getting lower, cost of living has continued to increase and salaries just haven't kept up - eventually we're going to hit a breaking point.

    This move by Flaherty was warranted and prudent. Not to mention, it is much less devastating than an interest rate hike would have been, as it keeps people who have already purchased in their homes.

    CAAMP really needs to reevaluate their mission.

  • Appraiser on 2012-12-07 1:30:28 AM

    There is nothing inherently wrong with 30-year ams. They have their place in Canada and are still the mortgage amortization of choice in the U.S.

    Flaherty went all-in too early. He needs to withdraw some chips from the table.

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