Ottawa is concerned about rising household debt levels. And they want to make sure that individuals aren’t taking on more debt at a time when they can least afford it. Mortgage brokers agree that people shouldn’t take on debt they can’t properly handle, but they don’t think there’s any danger of that happening in exponential numbers. And they disagree on the proposed further tightening of mortgage rules that it looks like Ottawa’s considering.
Reuters recently released a poll that surveyed 14 Canadian economists; of them, 1o thought that Ottawa is certainly on their way to tightening mortgage rules. And they think it’s going to happen in the next year. That might be generous actually, as many think that new rules will come right in time for spring, when the market starts to pick up and house-hunters start hitting the pavement looking for their dream home. Most of those experts agree that the tighter mortgage rules will come in the form of amortization periods being reduced to 25 years instead of the current 30; and they believe that the rules already imposed by several major lenders on self-employed individuals and immigrants will also be officially imposed by Ottawa. Along with those restrictions, economists also think that CMHC mortgage insurance will be drastically cut back, as it’s within 10% of its own cap; this would have more people relying on private mortgage insurance.
But, all hope is not lost for homeowners and future homeowners. CAAMP, the Canadian Association of Accredited Mortgage Professionals, is trying to actively lobby against the move. CEO Jim Murphy has already been to Ottawa twice this month to speak to them about the mortgage industry, trends for the coming year, and the new rules that are being discussed. And the Association is not just worried about its mortgage brokers either, but the effect that could have on the housing market, one of the biggest driving forces of the Canadian economy. After his second trip to the nation’s capital Murphy was quoted as saying, “We want the government to be aware of the economic and job contribution that housing and the real estate industry provide. CAAMP, based on current data and research, sees no need to further tighten or restrict access to residential mortgages at this time.
And a new report from CAAMP Chief Economist Will Dunning only further proves the point. That report pointed to the 18% of new job creation in the housing and mortgage sector during the years of 2006 – 2011. And no one’s overlooking the fact that this job growth took place at a time when the economy was at its worst.
