It’s been no secret over the past couple of months that there are many that think Finance Minister, Jim Flaherty, should tighten the rules on mortgages and simply make it harder for Canadians to get one. The entire time, Mr. Flaherty’s been somewhat quiet on the subject, not imposing new rules and making a few small sounds about how doing so would hurt the construction industry and the unemployment rate. Either he’s gotten finally fed up though, or he just saw an opportunity during his visit to Stittsville, Ontario on Thursday. It was there that he called the banks’ call for tightening of mortgage rules “a bit much,” and outlined why he doesn’t understand the outcry.
During an event that was held to promote volunteer fire fighters, and the tax credit they are eligible for, Jim Flaherty touched on some remarks made over the past couple of weeks about mortgage tightening. “I find it a bit off that some of the bank executives are taking the position that the Minister of Finance or the government somehow should tell them how to run their business,” said Flaherty, clearly putting the onus back on the banks. “We have bank executives in Canada going and saying ‘really, the rules on insured mortgages should be tightened up.’ They must forget that they are actually the ones that issue the mortgages. It’s their market. It’s not my market. They decide what they want to charge in interest rates.”
It’s clear that Flaherty is referring to remarks made by TD Bank’s chief economist, Craig Alexander, last week in which he outlined three different ways that Flaherty and the government could tighten up the rules and simply make it harder to get a mortgage. Now though, it’s clear that the Finance Minister is lobbing the ball back to the side of the court where it belongs – the bank’s side – and making them take responsibility for their hand in the matter.
Flaherty also said during the meeting that he was reluctant to tighten rules once again because he sees a “softening of the market” happening all over Canada in the near future, and in some cities it’s begun already. Mr. Flaherty pointed to the cooling of Toronto mortgages on condo units and said that he, the banks, and Canadians should be encouraged by that. On that point he said, “There’s a balance there. The new-housing market produces a lot of jobs in Canada, so there’s a balance that needs to be addressed. I’d like to see the market correct itself if it can.”
The news should be taken as nothing but encouraging to Canadians. While the Finance Minister may be extremely concerned about our household debt and the amount of mortgages and HELOCs we’re taking on, he realizes it’s still consumer’s choice if they do actually want to take one on. And, he wants to remind everyone, the banks have a choice, too.
