The highly-anticipated budget was revealed on Parliament Hill yesterday and as everyone expected, it did include some issues regarding Canadian mortgages. Unfortunately, they weren’t the major changes that many financial analysts and experts in Canada were hoping to see.
Those such as Craig Alexander at TD Bank and Louis Gagnon at Queen’s University were hoping that this budget would include mandated shorter amortization periods as well as other rules that would make it even harder to get a mortgage. Finance Minister Jim Flaherty has said in recent weeks that there would be no tightening, and that if lenders want to tighten the rules, they should tighten them themselves. His budget indicated much the same with the report saying, “The government continuously monitors housing finance risks and takes action when necessary. Adjustments to the rules for government-backed and insured mortgages were announced in July 2008, February 2010, and January 2011.”
Although there won’t be any official tightening of mortgage rules, Mr. Flaherty did touch on an area of mortgages that would change – mortgage insurance, provided by CMHC. Within the budget Mr. Flaherty said that there would be more overseeing and governance of CMHC, the Crown corporation that insures mortgages. Currently, the CMHC holds 75% of the mortgage insurance in Canada, leaving just one-quarter of Canadians looking for private mortgage insurance. Mr. Flaherty’s budget document was somewhat vague on just what the new governance would include, with the document reading, “The government will introduce enhancements to the governance and oversight framework of Canada Mortgage and Housing Corporation. The government will propose legislative amendments to strengthen oversight of CMHC and to ensure its commercial activities are managed in a manner that promotes the stability of the financial system.”
Other interesting, although non-mortgage news, from the federal budget saw that the penny will no longer be produced, since it costs more than $0.01 to make one penny. It’s an issue Ottawa has looked at before, but the first time that any real moves have been made to get rid of the penny, a coin Canada spends $11 million on every year. Pennies will no longer be minted as of fall 2012.
Also as many expected, the Old Age Security minimum age requirements will be pushed up to 67 instead of the current 65. Those changes will go into effect as of April 2023, keeping current Boomers and anyone currently over the age of 54 won’t be affected.
