Flaherty stays - better the devil you know

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Mortgage brokers may have been ready to burn Jim Flaherty in effigy last year when he tightened the mortgage rules, but yesterday’s announcement by the Prime Minister that Flaherty would remain as finance minister drew a grudging sigh of relief across the channel.
“I believe it is a good move by Harper because you wouldn’t want someone else to come in and undo all of the good that he has done,” says Murray Groen, broker and regional partner of The Groen Team, Mortgage Brokers Ottawa. “I am not saying everything he has done is perfect, but we have not experienced the housing bubble that many people feared, which, overall, is good for the housing market and mortgage brokers too.”
Brad Compton of Invis YourLowMortgage.ca agrees, and can’t foresee any more restrictions being placed on the mortgage industry.  
“It’s hard to say. I think the damage has been done and even if Flaherty left his job, I can't see his successor reversing any of his decisions,” Compton told MortgageBrokerNews.ca. “As well, I think Flaherty's changes have had the desired affect and have cooled the Canadian housing market. I think he realizes any further restrictions would be unnecessary and would have further negative impact on the Canadian economy.”
Groen however, believes that the fluid nature of the global economy may spur more tinkering from the minister of finance.
“I think we may see tweaks in the mortgage industry more often than we did in the past,” he cautions. “With the speed economies change today and how much the global economy is intertwined we all need to be ready to adapt to change quickly. We know it is harder to get deals done now than it was but there is also not the same stability in the economy either, so it makes sense that it is harder to get them done.”
Groen cites recent history as proving his prediction true.
“Before 2004, how many major changes did we see in the mortgage qualifying rules?” he asks. “Not many, for decades the mortgage rules were very similar.”
Some of the first “tweaks” that Flaherty may apply may be for first-time homebuyers.
“I do see some room for improvement from today’s current mortgage rules, for example, allowing first-time home buyers to take on longer amortizations only on their first home purchase, versus the standard 25 year amortization for high ratio mortgages,” he says. “With incentives for first-time home buyers it can help maintain a stable growth in the real estate industry versus large peaks and valleys.”
  • Kent Farnsworth, Meridian Simply Mortgages on 2013-07-16 8:59:17 AM

    All these changes made over the past 5 years have made it incredibly difficult mostly for new home buyers, self employed and people needing to use some equity in their homes. All these changes were made in the guise of a fictitious housing bubble, and of course "Household debt".
    I find it incredible that for 5 straight years, us people in the mortgage industry have had to deal with the stress of the conservative governments misunderstanding of the real culprits. Yes there were some changes that needed to be made to the rules but there should also have been some serious changes to the auto finance industry and unsecured revolving credit rules.
    How is it possible that a person can buy a car, trade it in 2 years early and then finance 120% of the new vehicle??? To get approved for this type of loan, a simple paystub most times will suffice. No call to employers to verify income or anything. And credit cards.. That is even more ridiculous. A person can go online, state that they make 150k per year and if they have great credit, they'll get a limit justifying that sort of income, even though they may only make 25k per year! The federal government obviously feel that this sort of lending is ok as they have done NOTHING to change it. But they certainly have beat the hell out of me for the past 5 years. I don't think it's good at all that this half wit is still the finance minister. I just hope that in the next election they're finally gone, and the liberals will ease up on some things in our business and reflect upon the predatory lending practices in the auto and credit card business.

  • John on 2013-07-16 1:29:30 PM

    What slowed the real estate market was the media talking about all the changes, not the changes themselves. The changes did nothing and now that the media is on to other topics the real estate market is booming. My two cents.

  • Kenzie MacDermid on 2013-07-18 8:34:31 AM

    100% correct Kent! The conservative government is all about screwing the self employed, first time buyers, and those looking to use their OWN equity in their house to consolidate debt. The default rate with CMHC is low. The Bank of Canada is mandated to control growth and inflation, so let them do this through interest rate modification. All Flaherty is doing is making sure people pay more in interest and thus making his friends at the Green bank, etc more money. This is all total b.s. in my opinion. Let free markets control them selves.

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