The Canadian government is reportedly considering tougher mortgage rules, but brokers warn that they would negatively impact the industry’s most crucial client type.
Rumblings of further mortgage tightening are already frustrating brokers, who argue they will unfairly affect the wrong type of buyer.
“We’ve already seen the impact of the most recent changes and young professionals are really struggling to get into the market,” Dianne Smith of Invis told MortgageBrokerNews.ca. “The housing and mortgage business is really dependent on first-time buyers and they would be the most affected.”
According to the Financial Post, the federal government is looking at ways to cool the housing market and is considering an increase to the minimum down payment requirement.
“They are definitely looking into this but it doesn’t mean that they will do it,” an anonymous source told the Post.
Another source confirmed the government is considering it, while a Department of Finance source denied that Ottawa is considering raising the minimum down payment from five per cent.
But would the move make sense? The economy needs the stimulation that a rate cut provides, with the government, say analysts, unwilling to stimulate the economy with the more-usual infrastructure spending favoured by past regimes.
The talk of further restrictions will certainly ramp up in the wake of the Bank of Canada lowering the target for its overnight rate to ½ per cent and buyers take advantage of record-low rates.
Still, brokers argue any move to hike minimum down payments will not rein in the ever-increasing housing prices because they will affect first-time buyers; buyers who aren’t known to purchase the million dollar homes that are driving up the average housing price in Canada.
“I can’t see (the government increasing the minimum down payment) as fair; there has got to be a better way,” Smith said. “I just don’t think it’s fair to punish the market segment that is so critical to the housing industry.”
“We’ve already seen the impact of the most recent changes and young professionals are really struggling to get into the market,” Dianne Smith of Invis told MortgageBrokerNews.ca. “The housing and mortgage business is really dependent on first-time buyers and they would be the most affected.”
According to the Financial Post, the federal government is looking at ways to cool the housing market and is considering an increase to the minimum down payment requirement.
“They are definitely looking into this but it doesn’t mean that they will do it,” an anonymous source told the Post.
Another source confirmed the government is considering it, while a Department of Finance source denied that Ottawa is considering raising the minimum down payment from five per cent.
But would the move make sense? The economy needs the stimulation that a rate cut provides, with the government, say analysts, unwilling to stimulate the economy with the more-usual infrastructure spending favoured by past regimes.
The talk of further restrictions will certainly ramp up in the wake of the Bank of Canada lowering the target for its overnight rate to ½ per cent and buyers take advantage of record-low rates.
Still, brokers argue any move to hike minimum down payments will not rein in the ever-increasing housing prices because they will affect first-time buyers; buyers who aren’t known to purchase the million dollar homes that are driving up the average housing price in Canada.
“I can’t see (the government increasing the minimum down payment) as fair; there has got to be a better way,” Smith said. “I just don’t think it’s fair to punish the market segment that is so critical to the housing industry.”
