The new mortgage rules become active tomorrow. For the record, here are a few recent responses to the changes:
“We should caution the minister to avoid precipitous actions that would undermine the stability of housing markets. We have stressed the important role our industry continues to play in Canada’s economic performance. There is a clear linkage between stable markets and Canadians’ financial well-being, for both homeowners and home purchasers. …
Having made these changes to mortgage rules, the minister has an obligation to monitor their impact very closely, in all housing markets across Canada. These regulatory actions paint all markets with the same brush, whether they are currently strong, balanced or weak.
We need assurances that the minister of finance will reconsider the new mortgage rules if the evidence shows the result in market instability.”
– from ‘Do the feds really ‘get’ new mortgage rule?’, Stu Niebergall, executive director of the Regina and Region Home Builders’ Association, Regina Leader Post, 23 Jun 2012
“History may look upon this pronouncement and call it Flaherty’s Folly. In the interim, many buyers will see it as more blood drained from their rosy dream of owning a Vancouver home.”
– Larry Yatkowsky, Vancouver Realtor, yattermatters.com, 23 Jun 2012
“These changes, together with new OSFI underwriting guidelines… may precipitate the housing market downturn the government so desperately wants to avoid.”
– Statement, Canadian Association of Accredited Mortgage Professionals (CAAMP), 21 Jun 2012
“A change in the amortization period down by five years is going to affect most people’s buying power by $10,000, $20,000 or $30,000. In today’s housing market, that can be the difference between a really nice place and an average place. Most first-time homebuyers are trying to get into something they really like by pushing their limits.”
– Jeff Trounsell, Vancouver mortgage broker, Vancouver Sun, 22 Jun 2012
“Will this be enough to dampen the market? Maybe, but by own analysis not very much. I expect Flaherty’s move will prevent some on-the-edge buyers from making the leap too soon — but will do little or nothing to address affordability.”
– Don Cayo, Vancouver Sun, 21 Jun 2012
For a measured analysis, read Robert McLister at Canadian Mortgage Trends, 23 Jun 2012:
“Despite the short-term pain and critical comments, it is clear that housing volatility will be reduced by these moves, over the long term. And that’s a positive…if you look far enough out.
The questions are, how long is long-term, how unpleasant are the side effects, and could those side effects have be minimized by a more incremental implementation?
Whatever the case, credit is due to the DoF, OSFI and Bank of Canada… they want to do the right thing.”