Federal Budget – No Changes To Mortgage Lending

“In fact in the entire budget, for which at least one medium forest died, the words “mortgage debt” do not appear. No cautions about overborrowing or the dangerous amount of collective net worth now stuffed into a single asset.
So much for Mark Carney. His continuous warnings about overheated housing in Vancouver, condo madness in Toronto or the inevitable impact of higher interest rates.”

– Garth Turner at greaterfool.ca 29 Mar 2012

“I had hoped this budget was really going to have some significance, but its totally anti-climatic. Canada is being crippled economically with the biggest ponzi scheme this country has ever seen.”
– ‘Vancouver Mt Pleasant renter’ at greaterfool.ca 29 Mar 2012 6:08pm

It’s what he didn’t say that is noteworthy.
The dog that didn’t bark.
The Finance Minister tippy-toed around the housing bubble, knowing that if he woke the bear, so much else in his budget would become moot. The bear will wake, regardless.
– vreaa

13 responses to “Federal Budget – No Changes To Mortgage Lending

  1. The OFSI is pushing hard for some major changes. I would guess that changes to the mortgage rules will occur much as they have in the past, as announcements entirely separate from the Budget. Changing these types of rules do not necessarily require changes in legislation. I believe in the past they were changed by simple Orders in Council within cabinet, or even within the regulators themselves (OFSI, CHMC, etc.) with direction from Cabinet. I could be wrong about that of course.

    • That’s about right. OSFI (not OFSI) reports to the Minister of Finance and is quasi-independent. They are governed by the Office of the Superintendent of Financial Institutions Act.

      There are complexities in this arrangement, the most pertinent output is that OSFI is acting, in effect, based on guidance from the Department of Finance, and indirectly the Bank of Canada, based on improving financial oversight and risk management practices at the banks.

      I’d consider their latest draft Guideline B20 as the equivalent of Flaherty “releasing the hounds”.

  2. it’s not as obvious as 3 state governors whoring pink slime, but you know c and f are owned. compare to arrests of high profile developers in hk – now that’s a message

  3. Some dogs bark, Some dogs bite. Lets not judge just yet.

    • maybe. but i’ve seen the canada south production up close. applying blackbox logic, they’re either owned, incompetent or both. which one exactly is sort of irrelevant. effectively, it means i’m not hitching my future to it and need to frontrun the consequences.

  4. Worse still, they are eliminating the penny.

    Now what are overly indebted homeowners going to roll in order to buy Kraft Dinner for the kids?

  5. The government has already acted to curtail the housing bubble. Why distract people by putting it in a marquee fiscal policy dossier?

    They did mention a few harbingers: CMHC legislative review (again), and covered bonds. Both big deals but no specifics yet.

  6. 4SlicesofCheese

    Victorias property tax raised by 3.25%

  7. A praise for reverse mortgage from Vancouver Sun – http://www.vancouversun.com/business/Reverse+mortgages+offer+house+rich+option+avoid+cash+poverty/6381374/story.html

    Interesting that the guy promoting it says that LOC aren’t good for seniors because many can’t afford the $300/month interest charge on a $100K loan. But a reverse mortgage with variable interest rate starting at 4.9% and fixed starting at over 5% is perfectly fine because you don’t have to interest upfront.

  8. Good budget for boomers, they can stay in their public sector job until retired, and their OAS age won’t change. Generations after them will have to work a few years longer to pay for everything (pensions for themselves and older generations, plus of course a massive mortgage) but with fewer jobs available, at least in the public sector.

  9. Check out this house price index tool you can play with on The Economic Website. Compare Canada to other western countries. I find it especially telling the price to rent index and price against income indexes. Shorten the timespan to the last 8 years or so and Canada seems to beat every country in bubble metrics.


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