Deputy Minister Of Finance – “The housing market is cooling and slowing. We read a lot of press commentary saying it’s because of the government’s changes to mortgage insurance rules. I think it’s actually too early to make the direct link.”

“Canada’s deputy minister of finance says he isn’t convinced tighter mortgage rules his department announced in June are behind the recent cooling in the housing market.
In a rare public speech, Michael Horgan argued that recent comments linking the two are premature.
“There’s some evidence that the housing market, particularly in some markets, is cooling and slowing at the moment,” he said Monday during a presentation to business students at Carleton University. “We read a lot of press commentary that’s saying it’s because of the government’s changes to mortgage insurance rules. I think it’s actually too early to make the direct link.” …
It is the kind of analysis that leaves Mr. Horgan unconvinced. While he says there is likely some cause and effect at this point, he suspects it is more likely that Canadians are starting to realize their household debt levels need to be addressed.
Mr. Horgan pointed to data released this month that the ratio of market household debt to disposable income hit 163 per cent in the second quarter, which the deputy minister noted is at similar levels as those in the United States before the recession.”

– from ‘Finance official questions link between cooling housing market, mortgage rules’, Bill Curry, G&M, 29 Oct 2012 [hat-tip allen]

We agree with Mr Horgan.
See our post from last month ‘Erroneous Theories For Falling Prices #5 – Tightening Of Mortgage Rules Caused The Crash
The Canadian bubble was already beginning to collapse under its own weight; mortgage rule tightening may have helped it along a bit.
Posters on this site have already pointed out that in Vancouver our RE sales, and, to a lesser extent prices, were already in decline before the new rules were even announced.
– vreaa

6 responses to “Deputy Minister Of Finance – “The housing market is cooling and slowing. We read a lot of press commentary saying it’s because of the government’s changes to mortgage insurance rules. I think it’s actually too early to make the direct link.”

  1. BC is showing signs of weakness, Ontario OTOH…

    This guy probably sits on the Free Market Jedi Council. Market forces are strong, so strong government intervention is required.

  2. Why do the likes of Mr Horgan never make any mention of the role government intervention played in creating the bubble in the first place? Why is the federal government in the business of insuring mortgages at all?

  3. Speaking of, “collapsing under its own weight”… here’s a splendid example of the extreme lengths to which some national governments in ‘a spot o’bother’ will go to ‘balance the books’*…

    “… As we go through this change programme it’s going to have space in it that we don’t need. In central London that’s an expensive luxury.” – Deputy Commissioner Craig Mackey, London Metropolitan Police

    [BBC] – Scotland Yard could be sold as part of £500m savings plan

    …”New Scotland Yard in Victoria, central London, would be put up for sale under proposals designed to deliver savings and boost frontline policing.

    Police stations across London would also be under threat, with five already approved for sale, as the force seeks to dispose of a third of its estate.

    The plans were revealed to the deputy mayor for police and crime on Tuesday.

    John Tully, chairman of the Metropolitan Police Federation, said plans to sell the HQ was like losing the “Crown Jewels”. “….

    http://tinyurl.com/8t7pooo

    [NoteToEd: Where will Inspector Lestrade hang his hat now? Perhaps Sherlock and Watson will petition Mrs. Hudson on his behalf. Oh yes… In case you hadn’t already guessed… *it’s actually about the RealEstate. It always is. Somehow. Hmmm, come to think of it, HM does have an aircraft carrier for which they had neglected to purchase any… aircraft… perhaps they should just moor it in the Thames and use that? Say, has anyone seen the CrownJewels lately?]

  4. RoboRedaktor has taken a hostage! “help… Help!”…

    [Hostage released after successful negotiations. -ed.]

  5. I agree. Van west, west van, and Richmond were already correcting before the changes. These markets are now seeing declines and many homes are sitting on the market.

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