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Are the New Mortgage Rules Targeting the Right People?

2 July 2012

Most people have been in agreement that the new mortgage rules that will be in effect as of July 9 were the right ones to make. But one group of Toronto mortgage brokers say that instead of restricting foreign investors – which needs to be done – the government has instead forced Canadians out of their own market.

The brokers from Syndicate Mortgages say, “The market inflation is due to investors from overseas which purchase and sell homes in Canada at unreasonable prices. Instead of depriving a huge number of families from [home refinancing] or the ability to buy a home, the government should actually be tightening the rules on investors purchasing homes from overseas. We think that the government is harping on the same string since 2008 and it’s high time to start looking at things from a different angle.”

But is it only investors that are selling homes at unreasonable prices? Earlier this year it was a foreign buyer who purchased a Toronto property for twice its asking price, not sold it for that; and with so nearly every single home on the Toronto market being overpriced, how is it just foreign investors that are causing the problem? Surely they can’t own every single one.

The broker also went on to say that the new refinancing rules would cause a ‘domino effect,’ and said that it would cause borrowers to take out high-interest credit cards. They say that “homeowners won’t be able to refinance to renovate and this will force them to obtain unsecure credit which will be from 10-18 per cent and hurt their credit.”

Hurting credit shouldn’t happen, even with “bad” credit that comes in the form of cards, as long as the holders of the cards make their payments – something they should know they’re able to do when they sign up for the card. And we all also need to remember that no one “forces” anyone to get a credit card – or to make renovations on our home.

The brokers even went on to say that the new rules wouldn’t just hurt Canadian homeowners and homebuyers – but small businesses too! Because these small business owners often rely on home equity loans and HELOCs for expenses or start-up costs, and now the amount taken out on those loans is reduced, the broker says that business owners will again “be forced” to seek out lenders that charge higher mortgage rates. But why is that? If they have enough equity to comfortably borrow from, they should be able to use whichever lender they want.

The broker ended their comments by saying, “Once again, we would like to propose a better solution which is focusing on rules for investors rather than making things difficult for buyers and owners.”

Just what that proposal is, and how it’s going to better our housing problem, they didn’t say.

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