There’s been a huge amount of talk this week surrounding the most recent changes made on mortgages in Ottawa. While this one – the changing of CMHC’s oversight and governance – isn’t nearly as severe as the other changes Ottawa has made, Jim Flaherty is still hearing a lot about it. Some think the changes are exactly what was needed, while others think that they’re going to have a devastating effect on the housing market. Others still think that the changes are so small, that the housing market won’t see an effect from them at all.
One person to be most harsh on Flaherty’s recent announcement was Ben Rabidoux, analyst at M Hanson Advisors. He suggested that moving CMHC’s oversight to the Office of the Superintendent of Financial Institutions, Flaherty was simply passing the buck, so that it doesn’t land on him when the crash comes. “This is a credit-driven market and Flaherty is walking a tightrope when he tries to slowly rein it in and induce a soft landing, particularly when you see how reliant the economy is on this current housing boom. I think he is starting to get a sense, rightfully so, that a soft landing is not in the cards and, by passing the dirty work off to OSFI, he’s not the one seen to be responsible for it.”
But don’t take one analyst’s word for it. There are others who couldn’t feel differently than Rabidoux, such as former Ottawa mortgage broker, now Carlteton University professor, Ian Lee, thinks that Flaherty had to do something. And this is just teh thing. He said that the change was “long overdue,” and compared the move with something every Canadian can relate to. “The role of the government,” said Lee, “is to referee the hockey game and regulate it aggressively. But they shouldn’t be owning one of the teams.”
But some still think that this may be pushing it a bit, and that we shouldn’t be so optimistic that this new change will really do all that much to cool a very overheated market. CIBC deputy chief economist Benjamin Tal says, “The surprise will be how little this will change as far as the overall activity of CMHC goes. [This is] only changing reporting lines,” and that he says, is not nearly enough.
Three different experts, three different opinions. What’s yours? Do you think that Ottawa’s recent changes to CMHC are good, bad, or indifferent?
