Finance Minister Jim Flaherty appears to be backing away from further interference with the mortgage industry, sharing his satisfaction with the housing market and addressing a call for higher interest rates.
“I’m comfortable with the way the housing situation has evolved,” Flaherty said at a news conference on Monday. “I tightened the rules on mortgage insurance four times in the past several years, and OSFI has also taken some action, the superintendent of financial institutions, and I’m comfortable with what I’ve seen.”
The most recent of Flaherty’s changes were made last summer and include lowering the maximum amortization period for insurable mortgages from 30 years to 25 years.
The statement came as the minister responded to a suggestion from Scotiabank CEO Rick Waugh, calling for increased interest rates as the best way to further slow the market.
“It’s not an underwriting or credit problem, it’s the fact that (low) interest rates do cause bubbles,” Waugh told reporters in Toronto last week. “I do not think there is a bubble, but if you’re really concerned -- and you’re a policy maker -- you know what the right thing to do is? Raise interest rates.”
Fixed interest rates have been increasing, though the Bank of Canada’s refusal to increase the overnight rate has held variable rates steady.
Speculation is also growing that OSFI -- whose changes thus far have satisfied Flaherty – will make further changes to underwriting rules. However, a representative told MortgageBrokerNews.ca last week that no decision to implement changes has yet been made.
“If we decide to revise Guideline B-20 we will undertake public consultations,” Annik Faucher of OSFI told MortgageBrokerNews.ca. “No decisions have yet been reached.”