Put the blame on mortgage rules

Put the blame on mortgage rules

A new report is placing the blame for a slowing real estate market squarely on the shoulders of the federal government and its move to tighter mortgage rules in July.

The Conference Board of Canada says its research indicates sales fell in August from the month earlier in 21 of the 28 metropolitan areas now being tracked.

New listings also slowed in 17 of those centres.

While signs of that slowdown began to surface before the new rules around amortization and refinancing came into force, much of the deceleration began after Ottawa`s July 9 implementation date, according to the report.

For August, in particular, average prices were down in nine of the 28 municipalities, although, accordinf to the Conference Board, slower sales and fewer listings haven`t necessarily translated in lower prices in all markets.

Last week, the Canadian Real Estate Association reported that sales of existing homes fell 5.8 per cent in August from July, and were down 8.9 per cent from August 2011.

  • Jim A - Toronto and Durham Broker 2012-09-25 3:30:16 AM
    I have stated that the true way to help the canadian consumer is to attack the high interest loan companies, the high interest finance companies, and most importantly the very high credit card companies. These are the issues to high debt in Canada. Now instead of helping people get into the real estate market the government has done something that ensures the real estate ownership is much furthur then sooner. This was and still is a bad move against the consumer.
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  • Paolo Di Petta | dipettamortgage.com 2012-09-25 5:41:20 AM
    While the new mortgage rules HAVE contributed to the downturn, what was the alternative? Continuing to allow people to pile on debt with minimal-down mortgages because "rates are low and debt is cheap"? Letting the real estate market affordability continue to erode? Allowing the problem to continue to get worse than it already is?

    The more the bubble inflates, the bigger the pop will be. I'd argue that these measures should have been taken even earlier. Rather than letting the problem build up to something so massive, it would have been easier to tackle with smaller periodic corrections. It certainly would have hurt a lot less before than it did now.

    Perhaps then the Real Estate market wouldn't be so inflated. Even the first-time home buyers that are having such trouble coming up with a down payment could have had that same down payment go a longer way. This problem wouldn't have existed if we wouldn't have allowed the market to get out of control.
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