“The next decade for real estate in Canada will be fundamentally different than the last. Our aging population, a mismatch between where our prices are and where they should be based on our economic performance, and rising interest rates are all reasons for this. However, the greatest difference will be in the availability of credit going forward, and those who try to explain real estate prices in Canada without acknowledging the role of easy, accessible credit over the past ten years or so have completely missed the boat.”
“Despite three rounds of mortgage rule changes since 2008 that largely corrected previous mistakes, we’ve seen a decade of extraordinarily loose lending in Canada. But the era of cheap credit may soon end–and possibly quite abruptly. News has come from Canada Mortgage and Housing Corporation and the Office of the Superintendent of Financial Institutions Canada, Canada’s chief financial regulator, that major changes are on the way, and it’s hard to understate how significant they may prove to be.”
[Ben then elaborates on] the three changes:
1) CMHC will drastically draw down on mortgage insurance.
2) OSFI targets HELOCs and conventional mortgages.
3) “Increased oversight of CMHC” coming.
- Ben Rabidoux of The Economic Analyst, now also an analyst at M Hanson Advisors, at Macleans.ca, 23 Apr 2012
A brief, ‘must read’ article.
Significant for it’s appearance at Macleans.
We are in complete agreement that far and away the major force driving our speculative mania in housing has been cheap credit.