Many brokers will respectfully disagree, but Finance Minister Jim Flahery and his deputy say it’s too early to judge the impact of the government's mortgage rule changes, despite the accelerated slowdown since their introduction.
“The full impact has not yet been felt,” Flaherty said in a television interview yesterday.
In a public speech at Carlton University, Deputy Finance Minister Michael Horgan also said he didn’t think the tighter mortgage rules announced in June by the government are responsible for the slowing market.
“We read a lot of press commentary saying that’s saying it’s because of the government’s changes to mortgage insurance rules,” he said. “I think it’s actually too early to make a direct link.”
Three months ago in an effort to avert a debt crisis, the government reduced the maximum amortization for government-insured mortgages from 30 years to 25. The feds also reduced the amount of equity that can be borrowed against a home from 85 per cent to 80 per cent.
Housing sales have fallen in 21 of 28 metropolitan areas the Conference Board of Canada tracks and much of the reduction occurred in July when the new rules took effect, according to the board. September sales numbers from CREA reveal an even deeper drop in activity in September.
Still, addition to the difficulty in getting credit, job loses have taken their toll on Canadian’s home purchasing desires, according to an earlier Scotiabank report. For brokers, they continue to see the mortgage rules as unnecessary intervention, something Flaherty's statement Monday may back up.