Flaherty may change mortgage rules to curb housing bubble: CTV
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21/12/2009 7:00:00 AM
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Finance Minister Jim Flaherty may increase the minimum down payment for homebuyers and cut back amortization periods if the housing market continues to heat up, according to CTV News.
"If we see further evidence that there is excessive demand in the housing market or that there's an indication that people are taking on obligations that they will not be able to handle in the future when interest rates rise, then we will take some action," Flaherty said in an interview with CTV's Question Period that will air next week.
He added, "The likely action we will take is to increase the size of the down payment from five per cent to a higher number, reduce amortization - bring it down from 35 years to something less."
Flaherty's comments come after the release of the November housing numbers last week by the Canadian Real Estate Association, which showed existing home sales increasing by 73 per cent compared to a year ago and prices rising by 20 per cent.
The Department of Finance reduced the maximum amortization period for mortgages from 40 years to 35 years in October 2008 in an effort to prevent a U.S.-style housing bubble.
Should Flaherty impose new mortgage rules if the housing market continues to heat up? Share your thoughts with mortgagebrokernews.ca in our Comments section.
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Chris Richards on
22 Dec 2009 08:25 PM
Certainly we should try and cool run away markets and it is also important to note that Canada is not one big homogeneous real estate market! There are a lot of markets that are still slipping so a national response is not called for and could damage many fragile markets. So I wonder whether a solution could be regionally based. For example in the hot markets, increase down payment requirements or lower debt servicing ratios for 5% down applications, etc. - but not on a national level. There has to better solutions than whacking the entire market with a "blunt instrument."
E. Hayes on
01 Jan 2010 05:54 PM
Here again, government is getting involved with Canadian's options buy a home. Lets stop some of the unnecessary spending before you tell me that we need to make buying a home more difficult. Read some of the great information from professional economists and you will see that the recent high number of sales is directly associated with buyers wishing to beat the added burden of the HST and the likely increase in interest rates in summer of 2010.
D Brown on
11 Feb 2010 05:21 PM
It is rather amusing to read about tightening up the mortgage qualifications coming from someone who is responsible for blowing over 50 billion dollars more than he made this past year. Get a grip !! Who could conceivably understand the motivation behind this. This will condemn a large portion of the working population from ever owning a home and make them lifelong renters.
Mr. Flaherty, As you propose this legislation I hope you are also commiting parliment; and I say parliment as all of the political parties are to blame for the deficeits of the past several years, to live by the same rules. If you apply normal rules of borrowing to the government of Canada, you wouldn't qualify to borrow five cents.
With our current deficeit of over 500 billion dollars, you have mortgaged the future of even our great, great , grandchildren as they will still be paying off the deficeits that have been incurred at the present time. The only reason recent governments have been able to "balance a budget" is because of historically low interest rates and if you consider the reduction in interest payments due on the 500 billion, you really haven't balanced the budget at all. The actual monies saved have not been all applied to reducing the deficeit.
Why don't you first outlaw the "gilt lined" MP pension plan. MP's can certainly make do with the same pension the rest of Canadians have to. At the same time you can give back all the money the political parties have helped themselves to out of general taxation revenue. why not provide us with some real leadershhip instead opf carrying on in your morally bankrupt ways
P Kelly on
15 Feb 2010 07:35 AM
I don't agree with Flaherty. Another case where the government is trying to get into the bedrooms of the people. Government cannot legislate responsibility, It has to come from within. By so doing, the government will make it harder for the hard working middle class young couple to get their first home. Leave it alone.
laurcor2012 on
01 Apr 2011 06:45 PM
Stop hack the program!!!