Flaherty: Don`t blame the rule changes

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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.


  • John Dearin RPA,. AMP. on 2012-10-31 5:52:32 AM

    “The full impact has not yet been felt,” Flaherty said in a television interview yesterday.

    That's what scares me, the full impact has not been felt yet. I think there is a bigger slowdown coming and we will run right back into recession. By February 2013 or earlier.

  • Derek Rowley, RMA on 2012-10-31 1:22:18 PM

    Have the MOF and his deputy take a reality check. Of corse there is no slow down - Flaherty and his Deputy Dog are not on commission.And I totally agree with John Dearin.

  • ON Consumer on 2012-10-31 9:29:35 PM

    Mr. Rowley, a lot of brokers are simply submitting false documents to get around the new rules and increase their clients chances of a mortgage. I think the MOF should set more rules to keep brokers in check.

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