Following one industry professional’s argument that Finance Minister Joe Oliver should interfere in the mortgage lending industry, two brokers debate the role of government in regulating the housing market.
“The interest rates are where they are because the financial institutions are still making money at the interest rates on offer,” Phil LaRue of TMG
The Mortgage Group told MortgageBrokerNews.ca. “I don’t know why the government would interfere with interest rates being accorded to the consumers when they are publicly traded companies.”
LaRue’s comments were in response to one banking executive’s opinion that Financie Minister Joe Oliver should take his cue from his predecessor, Jim Flaherty
, and take action to lower mortgage rates.
"We need deleveraging to happen,” Sadiq Adatia, chief investment officer at Sun Life Global Investments said Tuesday, according to Business News Network. “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.”
As for whether LaRue believes it’s the government’s place to control interest rates, he answers his own hypothetical question.
“(Oliver) is staying out of the market; is it his place to control interest rates?” LaRue mused. “I don’t think it’s the government’s function to control interest rates.
“The housing industry, itself, has created its own supply and demand."
LaRue’s opinions are surely shared by many in the mortgage broker industry but his TMG The Mortgage Group colleague, Aaron Barkley, isn’t one of them.
“I do believe the government should intervene when necessary to lower the rates,” Barkley told MortgageBrokerNews.ca. “As of right now the market is still healthy, though.”
However, Barkley also readily admits the changes implemented under Jim Flaherty’s reign were “obnoxious” and more sensible alternatives need to be researched by the government before interfering once again.