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Canada tightens mortgage rules to adjust to worsening world economic threat
http://www.thestar.com/business/mortgages/article/1214776--flaherty-set-to-announce-tighter-mortgage-rules?bn=1OTTAWA—Hemmed in by a deteriorating world economy, the federal government and the Bank of Canada are recalibrating their strategies in hopes of preserving growth in Canada without inciting a dangerous housing price bubble.
...snip...
“We just came back from the G20 meeting of leaders and finance ministers and the reality is that the European situation is very challenging, to put it mildly,” Flaherty said. “So my job is to look at our own country and look at the residential real estate market and make the best judgment that we can.”
In a speech in Halifax, Carney chimed in, “Federal authorities have taken additional prudent and timely measures to support the long-term stability of the Canadian housing market, and mitigate the risk of financial excesses.
“Our economy cannot depend indefinitely on debt-fuelled household expenditures, particularly in an environment of modest income growth,” the bank governor pointed out.
Flaherty said he acted to toughen mortgage rules for the fourth time in six years to slow the growth of a real estate bubble. He noted that the bursting of the U.S. housing bubble caused long-term damage to the American economy.
The government is tightening mortgages by reducing the maximum amortization for a government-insured mortgage to 25 years from 30 years.
It is also lowering the maximum amount Canadians can borrow when refinancing a property to 80 per cent from 85 per cent of the value of their homes. Flaherty has complained in the past about people using their homes at ATM machines.
And government-backed mortgage insurance will no longer be available for homes with a purchase price of more than $1 million.
...snip...
“We just came back from the G20 meeting of leaders and finance ministers and the reality is that the European situation is very challenging, to put it mildly,” Flaherty said. “So my job is to look at our own country and look at the residential real estate market and make the best judgment that we can.”
In a speech in Halifax, Carney chimed in, “Federal authorities have taken additional prudent and timely measures to support the long-term stability of the Canadian housing market, and mitigate the risk of financial excesses.
“Our economy cannot depend indefinitely on debt-fuelled household expenditures, particularly in an environment of modest income growth,” the bank governor pointed out.
Flaherty said he acted to toughen mortgage rules for the fourth time in six years to slow the growth of a real estate bubble. He noted that the bursting of the U.S. housing bubble caused long-term damage to the American economy.
The government is tightening mortgages by reducing the maximum amortization for a government-insured mortgage to 25 years from 30 years.
It is also lowering the maximum amount Canadians can borrow when refinancing a property to 80 per cent from 85 per cent of the value of their homes. Flaherty has complained in the past about people using their homes at ATM machines.
And government-backed mortgage insurance will no longer be available for homes with a purchase price of more than $1 million.
So this is good, right? I mean, I rarely support anything the HarperCons do, but at least this seems to be a conservative move in a good way - prudent, promoting stability - as opposed to being "conservative" in a libertarian, corporatist way. Honestly, and maybe I'm deluding myself a bit here, this is the type of story that makes me feel a bit smug about Canada, like, "Sure we have our Conservatives, and they are generally mean, entitled douchebags, but at least they aren't quite Republicans." (I felt this same kind of Canadian smugness listening to Conservative Whip Gordon O'Connor's unapologetic defence of abortion rights.)
