Jim Flaherty is now conceding the economy may take a bit of a beating because of the new, tighter mortgage rules – billing it as a necessary evil to protect the housing market.
"I realize it may have some dampening effect on the economy and I realize it may have some dampening effect in the residential real estate market,” the Finance minister said at a conference in Ireland Friday. “We're prepared to take that risk, quite frankly, because of the greater risk of the development over time of a housing bubble."
The acknowledgement may do little to silence broker concerns about a probable slowdown in home sales and the direct effect on their own businesses. They continue to challenge the need for the mortgage rule changes, which will see maximum amortizations capped at 25 years, among other key changes.
Agents in pricey markets and focused on first-time buyers are likely to bear the brunt of that economic tap.
Flaherty is now admitting the economy will likely slow, his assessment coming on the heels of similar predictions from bank economists.
Earlier this year, CAAMP laid out its arguments in a report designed to highlight the housing sector's influence.
Housing and mortgage activities, along, “could account for more than 1.35 million direct and indirect jobs (about 8 per cent of total Canadian employment,” writes CAAMP economist Will Dunning. “The housing and mortgage industry has been particularly important to job creation these past five years.”
The report estimates that from 2006 to 2011, 18 per cent of all job creation occurred as a direct and indirect result of growth in the housing and mortgage sector.
Rising home values, themselves, led to greater consumer spending, and thus, a stronger economy. That wind may be gone from the sails of the Canadian economy until the cloud of uncertainty is lifted from the global economy, say analysts.