Canada's finance minister Jim, "Mr. Magoo" Flaherty finally took steps to fix a problem he created, that of lax lending regulations surrounding the real estate market and mortgage financing.
Everyone likes to talk about how "Canada is different", that our banks didn't engage in the kind of shady financing practices which helped tank the US housing market. They conveniently forget 40 or 35 year mortgages with no money down, or the habit many fell into of using their homes as a credit card...refinancing as more and more newbies rushed into the housing market pushing prices up beyond where they went at the height of the US bubble - higher when you compare average home prices as a multiple of average annual earnings.
I'm on a training course down east, but still couldn't miss this news. No more 35 year mortgages and refinancing to a max of 85% of a home's value, long overdue Mr. Flaherty. The loose lending practices you initiated are going to come home to roost, but at least you've finally mitigated some of the damage this Conservative government caused by injecting steroid proportion liquidity to the housing market.
In the near term I won't be surprised to see a mini bump in the market as buyers rush in to grab up a 35 year am instead of waiting and seeing their buying power reduced by 7% or so.
Its all a matter of supply and demand as any 1st year student of economics knows. If these pending changes bring in more buyers than the available supply can handle we might see bidding wars in the near term. Unfortunately (for sellers) after the changes take place I don't see their being sufficient demand given the weak economic recovery, downsizing baby boomers, rising energy costs and the ballooning trade deficit brought on by the soaring loonie.
Flaherty and his Conservative friends have been able to paint themselves as competent managers of the economy by goosing the marketplace with cheap money, a dangerous drug that will cause serious withdrawal problems when the tap starts getting squeezed with these mortgage financing changes and higher interest rates.
I don't think Harper's Tories are stupid, far from it...just very opportunistic. As such I won't be surprised to see a snap election call within the next couple of months if the opposition parties decide to keep Harper in charge of the sinking ship.
Make no mistake, we're taking on water, but its below decks so not many are noticing....YET.
Thanks to you Canadian Soapbox is now listed in the Top Ten at Canadian Blogosphere. To help this blog climb even higher click on their icon, then hit the green button to vote - limit 1 vote per day per IP - thank you.
Everyone likes to talk about how "Canada is different", that our banks didn't engage in the kind of shady financing practices which helped tank the US housing market. They conveniently forget 40 or 35 year mortgages with no money down, or the habit many fell into of using their homes as a credit card...refinancing as more and more newbies rushed into the housing market pushing prices up beyond where they went at the height of the US bubble - higher when you compare average home prices as a multiple of average annual earnings.
I'm on a training course down east, but still couldn't miss this news. No more 35 year mortgages and refinancing to a max of 85% of a home's value, long overdue Mr. Flaherty. The loose lending practices you initiated are going to come home to roost, but at least you've finally mitigated some of the damage this Conservative government caused by injecting steroid proportion liquidity to the housing market.
In the near term I won't be surprised to see a mini bump in the market as buyers rush in to grab up a 35 year am instead of waiting and seeing their buying power reduced by 7% or so.
Its all a matter of supply and demand as any 1st year student of economics knows. If these pending changes bring in more buyers than the available supply can handle we might see bidding wars in the near term. Unfortunately (for sellers) after the changes take place I don't see their being sufficient demand given the weak economic recovery, downsizing baby boomers, rising energy costs and the ballooning trade deficit brought on by the soaring loonie.
Flaherty and his Conservative friends have been able to paint themselves as competent managers of the economy by goosing the marketplace with cheap money, a dangerous drug that will cause serious withdrawal problems when the tap starts getting squeezed with these mortgage financing changes and higher interest rates.
I don't think Harper's Tories are stupid, far from it...just very opportunistic. As such I won't be surprised to see a snap election call within the next couple of months if the opposition parties decide to keep Harper in charge of the sinking ship.
Make no mistake, we're taking on water, but its below decks so not many are noticing....YET.
Thanks to you Canadian Soapbox is now listed in the Top Ten at Canadian Blogosphere. To help this blog climb even higher click on their icon, then hit the green button to vote - limit 1 vote per day per IP - thank you.
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