New mortgage rules may dampen economic growth: Flaherty

Canada’s banking regulator is mulling a further tightening of mortgage rules. A spokesman for the Office of the Superintendent of Financial Institutions told industry newsletter Canadian Mortgage Trends that it’s considering new rules that would limit banks from issuing any mortgages at all with amortizations of more than 25 years.

OTTAWA — Finance Minister Jim Flaherty is not worried about a housing collapse, saying he is happy he has helped cool the market with the latest round of stricter mortgage rules. The finance minister says he is also encouraged Canadians are paying down their mortgages and credit cards, and taking on less debt. The housing slowdown was a big part of the disappointing economic downturn recorded in the third quarter, with the sector falling 3.5% annualized.

By Qineqt: U.S. - Canada Housing Update

When did it become the job of the minister of finance to boost bank profits and stick it to the consumer? How else do you describe a policy in which the minister of finance appears to tell the banks to cool it when it comes to battling on the mortgage front for customers. If I’m buying a home today I say: Bring on the mortgage rate wars! But Jim Flaherty’s comments seemed aimed at getting the banks to try and curb some of the heated competition that happened a year ago when the banks started battling for market share.

Canadian Finance Minister Jim Flaherty said he’s not worried by the recent wave of businesses spinning off real estate assets into tax-preferred trusts. Canadian Tire, the country’s largest sporting goods retailer, said May 9 it will create a $3.5 billion real estate income trust, or REIT, in an initial public offering this fall, becoming the eighth company to either sell or propose such an IPO this year.

Ottawa has increased by $50-billion the amount of residential mortgages that it is willing to guarantee. But this time the Canada Mortgage and Housing Corp., the biggest provider of mortgage default insurance, is not getting any. Instead, the additional backing is going only to private-sector players such as Genworth Canada, who will see their maximum raised to $300-billion from $250-billion. Genworth Canada disclosed the news on Thursday, which helped drive its shares up more than 3% to $22.73.

Finance Minister Jim Flaherty is expected to announce Thursday that mortgage rules will be tightened in an attempt to cool a heated housing market

There has already been 'some softening' in the Canadian real estate market so there is no need for further tightening of mortgage rules, said Jim Flaherty, the finance minister