Finance Minister Joe Oliver makes first mortgage-related comments

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It didn’t take long for Finance Minister Joe Oliver to weigh in on the mortgage industry, stating he will be keeping a watchful eye on the market.

"Our government has taken action in the past to reduce consumer indebtedness and the government's exposure to the housing market," Oliver told CTV News on Thursday. "I will continue to monitor the market closely."

In early March, Oliver took over for Jim Flaherty, whose zealous mortgage rule changes greatly impacted the industry, much to the chagrin of many mortgage brokers.

Oliver stated a major priority during his reign will be to “protect” Canadian tax payers.

"We've been over the long-term reducing the Canadian involvement in the mortgage market to protect the indebtedness of Canadian consumers and Canadian taxpayers and we will continue in that regard," told the media Thursday.

His comments follow the Bank of Montreal slashing its five year fixed-rate to 2.99 per cent; a move similar to the one in 2012 that was widely considered a catalyst for Flaherty’s tightened mortgage rules.

“This rate change is driven solely by the fact that bond yields have fallen and we are in what has traditionally been the busiest season for buying a home,” Paul Deegan, BMO vice-president government and public relations said in an emailed statement to the Toronto Star.

Oliver has not intimated what – if any – actions he would be willing to take if he believed the mortgage industry was once again deemed too hot.
  • Erica on 2014-03-31 12:01:00 PM

    If the government wants to "protect the indebtedness of Canadian consumers and Canadian taxpayers", why aren't they limiting the accessibility to credit cards from all these banks. Canadians would qualify for mortgages that increase net worth, build equity and secure retirement much better than 4 credit cards and LOC would and yet that seems to be much more accessible to Canadians than mortgages.

  • suresh Pawaroo on 2014-03-31 1:29:26 PM

    I totally agree with Erica. Credit card debt and unsecured LOCs are a bigger problem. Mortgages and the housing market are obviously interest rate driven. So the finance minister attempting to tell lenders how much interest they should be charging is a merely a band aid solution. As long as banks are underwriting deals in a prudent and careful manner, then we should be in for a soft landing when rates spike up.

  • Sanjay on 2014-03-31 1:29:30 PM

    Government focus should be on those high interest credit cards debts never ending payments. Tightening mortgage rules will deprive people further from getting their own home.

  • Joel Sida on 2014-03-31 2:04:26 PM

    People are doing fine paying their mortgages, credit card unsecured debt is killing the system, they are paying more for a car or credit card than a home

  • Dave on 2014-03-31 2:22:38 PM

    Banks are in bed with the Government when it comes to credit cards at 18.99% and $30,000 limits for people making $50k per year. That wont change anytime soon. But yes , it is the main problem in Canada, not mortgages.

  • Laurie Fletcher on 2014-03-31 2:32:01 PM

    I agree with Erica. Why is the Government not wanting us to invest in real estate? At least if there is an economic collapse we actually own real property. They should go after the banks for the high penalties that they charge when you payout a mortgage. Also the mortgage insurers are increasing premiums and also going after us personally. They should bare the risk along with us and only get the property back. The government also allows fly by night lenders to come into our market. When they leave they force payout at renewal. Why are these lenders not forced to renew with another Canadian Bank?

    Just frustrated with the whole mortgage market.

  • Connie on 2014-03-31 2:37:08 PM

    I also echo what these comments say. In addition, I would like to see the government/banks implement some interest rate relief for credit cards and more controls on how many credit cards an individual should be allowed to carry.

  • Connie on 2014-03-31 2:37:13 PM

    I also echo what these comments say. In addition, I would like to see the government/banks implement some interest rate relief for credit cards and more controls on how many credit cards an individual should be allowed to carry.

  • RickyD on 2014-03-31 2:41:41 PM

    ALL banks and credit card companies are no different when it comes charging 19-28% or higher rates to Canadians; they are ALL SCUM of the earth! Maybe if we bitch LOUD enough, the newly minted finance minister might be concerned about keeping his job, and help the PC's get re-elected by tackling the corrupt credit card industry with the same zeal that his predecessor Mr. Flaherty did with preventing a full recession; a recovery of sorts for some, and a soft landing for others!

  • Adrian on 2014-03-31 3:08:04 PM

    The banks will not allow Government to limit credit cards, car loans, LOCs (consumer debt) as this IS a money maker. Mortgages make the banks nothing so as a result consumer debt will continue to be the problem while mortgages are blamed.

  • Kelly Rowe on 2014-03-31 3:41:07 PM

    Funny how a bunch of Mortgage Professionals can see what the real debt problem is in this country. We have been commenting in this manner for some time, to no avail.
    Perhaps Caamp and our other advocates could continue to bring this message forward to the policy makers until they start to listen and act.

  • Bob on 2014-03-31 3:48:43 PM

    Stay the hell out of the mortgage markets! Government intervention does NOTHING except f**k it up for consumers! Let the market determine policy NOT the government! I do NOT need the government protecting me, I can do that MYSELF!

  • Kim Mortgage Broker on 2014-03-31 4:04:44 PM

    I completely agree with Erica. I wrote to Mr. Flaherty 3 years ago regarding this issue to no avail. Maybe we should ALL write to Joe Oliver so he gets a big message at the outset!!

  • Jon on 2014-03-31 5:39:11 PM

    why hasnt anyone mentioned Sub-prime car loans, that is by far a greater problem than credit cards or LOC. No one is forced to use a credit card or LOC and can pay the balance owing back if they have the discipline. With Sub-Prime Car loans the consumer is stuck as they can never sell the car as it depreciates faster than they can pay it down, there only option is to roll the balance of the loan into another sub-prime car loan! Even Prime Lenders have little to no income confirmation to buy a car, sorely based on stated income and beacon score. This is teh major reason why there's so much personal debt in my opinion

  • Angela Wong-Liao - Invis Inc on 2014-03-31 6:33:25 PM

    I fully agree that unsecured revolving debts is a bigger problem than secured mortgage. In my opinion, unsecured revolving debts, ie: credit cards and LOC are bad consumer debts while secured mortgage debts are good equity debts. Home ownership is not only pride but also as a means of our retirement package because of the equity build up over the years. CMHC was introduced in 1947 for the same reason that our government wanted more Canadians becoming home owners after the second world war and I truly cannot see how it is an issue now with the tax payers if the credit adjudication is conducted prudently and the beneficiary is Canadian home owners.

  • Leo Bradshaw on 2014-03-31 6:46:45 PM

    This is a tightrope that with a little wind could knock off the walker. Everyone should start locking in to 10 year terms on a 25 year amortization and then they could feel safe.

  • Paul Therien - CENTUM on 2014-04-02 1:13:51 PM

    Although I certainly understand frustrations with the continued ‘interference’ in the mortgage landscape I once again remind brokers of a very simple fact. Mortgages fall under government purview because of the NHA. CMHC, Genworth and Canada Guaranty all backed by the government (100%, 90% and 90% respectively). Because of this government insurance against loss, they have the authority and power to give direction to lenders with respect to insured mortgage lending. For most people they consider this to only mean high ratio mortgages, however given that the vast majority of lenders also bulk insure their conventional portfolio, it means that those mortgages are also subject to these rules.

    If lenders did not bulk insure then could they have broader lending rules? Yes they could. This would also mean however that these lenders would not have the ability to securitize and sell their portfolios with the same ease, which would restrict the available funds to lend.

    If we look at non mortgage related lending, the government does not have jurisdiction here because they do not insure this lending against loss. A lender ascertains allowable risk (delinquency and write offs), and sets rates and lending guidelines accordingly.

    If we as an industry are asking that the government start to manage and restrict non mortgage lending, the question has to be:

    Are we prepared to insure these products against loss to the lender as we do with mortgage lending?

    With a delinquency rate as high as 30% compared to mortgage delinquency at 0.24% - one has to question if the tax payer would be willing to bear that burden. I for one cannot see that they would, I most certainly would not.

  • M. Robertson on 2014-04-02 1:22:30 PM

    So all of these brokers that keep saying the government should stay out of the mortgage market... I guess you are OK then with them no longer providing government insurance? So the 100% backing that they give CMHC, and the 90% backing that Genworth and Canada Guarantee get... you are OK if they are gone yes?

    No more bulk insurance either... so that will mean that lenders cannot sell off their portfolio to source new funds to lend. That will result in less money being available, and that means much higher rates (supply and demand).

    People need to stop and think before they start rattling their sabre and crying to the heavens.

    Do some research and at least make an attempt to really understand the full picture before you hop up on your soap box.

  • Kevin on 2014-04-02 1:25:25 PM

    Please tell me that mortgage brokers are not really this stupid. I am not a broker nor do I work for a bank and I have a better understanding of this topic than most of the people that comment on here.

    It is nice to see that some take the time to understand things, as for the rest of you...

    You are seriously going to tell someone that you are an EXPERT? Really?

  • Clare on 2014-04-02 1:33:14 PM

    Somone, more than one person, said that they want to see the government restrict how many cards a person can carry...

    I thought we lived in a democracy!!??!!

    You mean to tell me that you think the gov't should excercise THAT MUCH control over our lives? What... you can't make your own decisions? Since when is it anyone's fault but my own if I choose to over spend?

    GOD help us, this country is so screwed up. It's the age of "I am too dumb to make my own choices and be held accountable for them"
    "Not my fault that I just HAD to have those fancy shoes, or go on that vacation even though I could not really afford it."

    People who refuse to be responsible for thieir own spending choices make me sick. GROW UP and be an adult. It is called LIFE for !@#$
    sake. You are an adult, you make the choice to spend like an idiot. Be responsible for your decisions and STOP BLAMING OTHERS BECAUSE YOU MADE BAD DECISIONS!!!!!!!!!!!

    As for you brokers who whine about it all. Try EDUCATING your customers and helping them make wise decisions instead of jumping on the "blame" bandwagon. You are worse then the people who spend like mad.

    What the @#$% happened to this country?

  • Nick D. on 2014-04-02 1:42:53 PM

    @Clare - GO FOR IT!! You only have to go through the forum on here to see that the vast majority of mortgage brokers spend more time complaining about how bad their lives are then actually being good brokers. It is any wonder that the industry is going down the tank.

  • Jonathan Askew on 2014-04-10 2:57:56 PM

    Instead of Govt. involvement in making it more difficult to obtain mortgage financing, maybe they should be addressing penalties and the IAD cash grab that the banks have instituted with the new formula introduced by all the banks within a month period . Obviously there was no collusion by the banks in coming up with an identical formula that would benefit them because that would be illegal. However when a client takes a 5 year mortgage at 2.89% and one year later has to sell due to a split up and they are facing a $14,000.00 penalty on a $340,000.00 mortgage , then the Govt. needs to step I and either make it easier to get a variable or come up with a formulae that does not benefit the bank so much . The actual yield for the bank on this deal by the term you add in the penalty is in excess of 7% for 1 year.

  • Doug on 2014-05-19 9:11:42 PM

    The banks aren't in bed with Gov't. The Gov't is in bed of the banks. Housing is a need, and a homebuyer should pay ZERO INTEREST to buy the owner-occupied house. Buy the lot and pay the builder--with all payments applied to principal.
    The mortgage funds are created out of thin air by the borrower's signature. The bank provided NOTHING! WHY should they earn all that interest-for having provided nothing!

  • Leo Bradshaw on 2014-05-20 6:58:45 AM

    The Banks would like nothing better than to completely control the mortgage market along with other money lending ideas. We should be wary of what we can and can't do and demand more choice in who we can deal with. We as consumers have a very restricted market to choose from. We don't have a real choice the Banks choose us and set rates and penalties we have to live with along with short terms rather than one 25 year mortgage at low rates so that we aren't held up to ransom when rates double or more.

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