There are more than a few people in Canada who don’t agree with the changes being made to mortgages in Ottawa; but perhaps none are as loud as the Canadian Mortgage Trends. This site, one much like this but with many glaring differences, has spoken out about the government’s new rules ever since they started being imposed last year. But yesterday they published a post that can only be described as pure anarchy.
In their post the website called the government of Canada arbitrary, hypocrites, and even hinted that they are capitalists, as though we live in some sort of Communist country. The remarks were harsh and we believe, far off base.
First, “the arbitrariness of it all,” as writes the website. The first argument given is in answer to Jim Flaherty’s comments that he spoke to banks about their “irresponsible lending” earlier in January and March when they were competing for rates, and told them he expected it to stop. Canadian Mortgage Trends argues that lowering mortgage discounts to 2.99% for a five-year fixed term isn’t really that much different from the 3.19% that’s being offered at most other, non-competing, banks.
That may be true and out of all the arguments the website gives, this one is certainly the soundest. But really, isn’t any attempt to try and stop the bleeding of Canadians’ dollars, and the Canadian house market, a good thing? It’s a very small, minute step, yes. But if your house was flooding, wouldn’t you take a small step to fix it – even if it was the only thing you could do? Jim Flaherty has admitted that he’s nearly run out of tricks to help stem the housing problem. This was obviously just one of the small ones that he had left and he used it. As he should have.
Secondly, “the hypocrisy of it all,” as states the website. This one can almost make you laugh, as Trends stated that our central bank is a hypocrite for keeping the overnight lending rate so low, while at the same time warning us not to take on excessive mortgage and second mortgage debt. While Trends states that rates are this low for the “purpose of fuelling consumption and lending,” this suggests that they may not actually know why rates are so low. In part it is to keep buyers on the market, but only so that construction crews and everyone else involved in the housing industry don’t go down the more house prices continue to soar.
The government has stated over and over again that rates are being kept so low because raising them would spell certain disaster for the rest of the economy. And experts and analysts have been talking for a year or more about how Jim Flaherty’s hand and Mark Carney’s hands are tied – they know it needs to be raised, but they can’t do it just quite yet. What is Canadian Mortgage Trends not understanding?
Lastly, the website stated “the anti-capitalism of it all,” asking, “are financial institutions supposed to lie down and accept government stepping in at its discretion to influence rates whenever it doesn’t like market pricing?”
Are they Communists? Jim Flaherty has been reiterating time and time again about how home prices are much too high, and how he hopes the “market will correct itself.” Yet he hasn’t stepped in since last year and made any huge changes to amortizations, interest rates, or anything else. The most recent change to CMHC was minor, and certainly doesn’t shout anit-capitalist beliefs. And why shouldn’t someone step in on Canadians’ behalf when people are trying to get us in over our head? Should the Canadian government tell us what to do, always shaking their finger at us? Of course not. But are they there to protect us? We all expect them to, don’t we?
Could our government be better? Well, no one’s perfect and there is always room for improvement. But are they really as terrible as Canadian Mortgage Trends would have you believe? We don’t think so.
