Brokers often lamented former Finance Minister Jim Flaherty
’s willingness to tinker with mortgage rules and regulations but one industry professional believes current minister, Joe Oliver’s laissez-faire approach could have disastrous effects.
“The old finance minister never would’ve allowed mortgage rates to go down,” Sadiq Adatia, chief investment officer at Sun Life Global Investments said in an interview at Bloomberg’s office in Toronto Tuesday, according to Business New Network. “He would’ve stepped up to do his part. The new one is more hands-off, and that’s actually a mistake.”
Rates have been dropping across the industry with a number of lenders – including monolines, credit unions and big banks – advertising sub-three per cent mortgage rates.
Most recently, DUCA Credit Union joined the fracas with its very own 2.79 per cent five-year fixed rate which, according to the Financial Post, brokers have been buying down to 2.69 per cent.
But while the rate competition will most certainly benefit consumers as well as mortgage professionals, Adatia believes these record-low rates, if allowed to continue, could negatively impact the housing market in Canada.
"We need deleveraging to happen,” Adatia said. “You need rates to go up to slow down purchasing and for people to realize we’re in a rising interest rate environment. We’ll see a pullback in real estate of 10 to 15 percent, but if we see rates stay low, we could see an even harder landing next year.”
But is more government intervention the answer? Some brokers may just agree to disagree with Adatia.