Flaherty threatens action

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Finance Minister Jim Flaherty says he will step in to intervene once more if the housing market appears to move toward a bubble.

"I'm comfortable with where we are, but we have to watch and, if we see anything moving toward a bubble, we can intervene," Flaherty said in an interview with BNN Television this week. "It's calming, which is good, especially the condo market, which was quite worrisome in Vancouver and Toronto, and a little bit in Montreal also," he continued.

Home sales rose across Canada for August year-over-year – bolstered in large part by significant jumps in Canada’s two largest housing markets.

Ontario reported a 10.6 per cent uptick in August sales, year-over-year and an average price increase of 5.7 per cent.

Not to be outshone, British Columbia reported a 28.6 per cent increase in sales activity and an 8.6 per cent jump in average prices.

The heated market is due, in large part, to the increase in fixed-mortgage rates after a period when they were at record lows. Fence-sitters who have been keeping rate-holds in their back pockets have decided to pounce on the market before rates increase even further.  Speculation also abounds that they will continue to do so, leading some brokers to believe clients will suffer from sticker shock.

“(I’m concerned about) people getting used to lower rates; as rates normalize again there will be a shock for clients,” Terry Kilakos of Verico North East Mortgage told MortgageBrokerNews.ca.

The market is expected to cool as rates continue to increase and the rate-holds that were locked in during the period of sub-3 per cent rates expire. That kind of movement may be enough to encourage Flaherty not intervene once more.

  • Jake on 2013-09-18 8:39:19 AM

    Flaherty needs to crap or get off the pot. Seriously. Enough already. http://www.cbc.ca/news/politics/no-plans-to-intervene-in-housing-market-flaherty-says-1.1309998

    one month- no plans.
    next month- maybe some plans.
    next month-back to nothing.

  • Russ Cameron on 2013-09-18 9:11:32 AM

    Folks I have wrote to the fed's through my MP..deal with the real problem Credit Card debt at 20% not mortgages at 4%..if you want to deal with a high housing prices in the big centres.. deal with those centres not rural areas where buying a home is cheaper than renting. As I've stated to Flaherty before a $50m credit card debt costs the same as a $200m mortgage and is a necessity in Canada

  • Donna D'Amico on 2013-09-18 9:48:31 AM

    Please give it a rest Mr. Flaherty. Find another industry to pick on for re-election purposes.

    Individual debt is heavier in the home because that is one of the biggest purchases for someone and a family. But please look at the 12-14% interest rates on Bank Credit Cards....this is where they make their money and they try to stir you away from it by looking at debt on the real estate side.

  • Michael Sjerven on 2013-09-18 1:14:19 PM

    Jim needs to raise interest BOC rates if he is concerned about the housing market.
    However, a down payment of 10% (min.) could also be something to look at, as it's still pretty easy for people to buy with very little money down.
    The government may want to ease up on qualifying rentals and BFS applications as these are getting way too difficult to do which may eventually crush the market.

  • Michael Sjerven on 2013-09-18 1:14:54 PM

    Jim needs to raise interest BOC rates if he is concerned about the housing market.
    However, a down payment of 10% (min.) could also be something to look at, as it's still pretty easy for people to buy with very little money down.
    The government may want to ease up on qualifying rentals and BFS applications as these are getting way too difficult to do which may eventually crush the market.

  • Michael Sjerven on 2013-09-18 1:15:20 PM

    Jim needs to raise interest BOC rates if he is concerned about the housing market.
    However, a down payment of 10% (min.) could also be something to look at, as it's still pretty easy for people to buy with very little money down.
    The government may want to ease up on qualifying rentals and BFS applications as these are getting way too difficult to do which may eventually crush the market.

  • Jake on 2013-09-18 1:26:03 PM

    Not sure why you posted 3x, probably a mistake, but 10% down minimum would KILL the market. Considering Toronto and Ontario Land tax above 400/200, 10% down is more like 15% down, which very very few have.

  • kac on 2013-09-18 1:48:43 PM

    slow down the housing market? increase the down payment? it is tough enough for people to save anything with the day to day cost of living and the taxes they have to pay to give the politicians their excessive salaries. The feds need to do something about the excessive charge card debt and how easy it is for a person with marginal credit and no income to walk out of an auto dealership with a $70k auto loan which carries a normal mortgage payment and ease up on the most secured lending out there. To boot more and more of our financial partners are now debt servicing 3% of unused credit card limits and loc's and amortizing heloc's at a 0 balance to eliminate any possibility of lending to the normal person as well as now giving bare bones solutions to anyone owning a rental property when they not too long ago made it convenient for the consumer to utilize equity to purchase a revenue property for their nest egg. These people are now restricted to renewing with the bank that carries the paper and in most cases has no ability to shop the market as no one wants them any longer and i am seeing already the banks know this and are easily able to charge higher rates on renewal as they know they can't get financing anywhere else. Im not too sure this has solved the economic downturn,with this continuing i cannot see the economy getting any better.

  • John on 2013-10-17 12:13:23 PM

    Congrats to the finance minister for not thinking what the results of the new mortgage rules could do . So he's to be our savior against debt when on the other side he's now created bankruptcies because people can't sell for example look at the condo market in the big cities .... Prices falling , lots of units on the market while chasing the downward trend and banks now seeing people showing up that need to get out of their home but can't and can't continue to afford the monthly payment . I predict we are now going to see lots of bankruptcies because of the mortgage rule changes .... Congrats minister ! Well thought through

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