Prime Minister: some have too much mortgage debt

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Some households are carrying too much mortgage debt even if the housing market remains stable. That was the warning Thursday by Stephen Harper who made it clear that the government believes that the housing market is currently stable but that it is being watched carefully.   He also weighed into the debate on the level and effect of foreign investors on Vancouver and Toronto saying there would not be a tax on foreign home investment from the Conservative government. Separately BC premier Christy Clark also dismissed calls for a specific tax on foreign investors but said the provincial government was considering ideas.
  • Keith on 2015-05-15 11:43:27 AM

    What does Mr. Harper define as having too much mortgage debt?
    It is the governments very own 5% down program that puts home buyers in this situation. They tell you you can buy with 5% down then tack on a CMHC fee of 3.15% leaving the buyer with a mere 1.85% equity.

    If this is what he is referring to then he needs to look at his own government policies as to why he thinks Canadians are over mortgaged.

  • Bill on 2015-05-15 5:37:56 PM

    Keith, nothing wrong with 5% down, do people have to borrow 45% TDS! Maybe Canadians should lower our expectations of where and we live in.

  • Darr Robbins on 2015-05-19 8:08:03 AM

    Keith, I agree. There's too little equity in homes which is the government's own doing. Anecdotal evidence suggests that the minimum down payment in 1974 was 10%. However, the norm was 25%.
    Today, there's just too much debt out there. Debt service will become an issue if investors price-in a higher risk premia, inflation or both. It would not take much to put low equity home owners underwater.

  • Darr Robbins on 2015-05-19 9:50:35 PM

    There's also a flip side to what I wrote namely: If the banks and the politicians panic in the face of a housing pull-back, the BoC will accelerate their bond buying initiative to flood the market with loonies putting a bid under all asset prices.

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