From the Press: What people are saying about the new mortgage rules
A day after Finance Minister Jim Flaherty announced three changes to mortgage rules in Canada, it appears the overall response from the financial community has been favourable; however, questions still remain, including whether clients must qualify at five-year posted rates or five-year discounted rates. Here''s a roundup of what''s being said in the press:
"The changes reflect reasonable public policy. Our government has taken the opposite tack to what has happened in the United States, where they have tried to attract the maximum number of people to make financial commitments regardless of ability to pay." - Phil Soper, president and CEO of Royal LePage (Toronto Star)
"In our opinion, the announced changes are prudent. They will not dramatically impact housing; but, they will help to cool the market, temper speculation and reduce the risk to personal finances from the inevitable future rise in interest rates. Although the policy adjustments are only to government-insured mortgages, which are for mortgages with less than a 20 per cent down payment, the new rules will probably be applied to all mortgage lending." - TD Economics
"It''s a fine line he (Flaherty) is walking. You have to act in a responsible way in a hot real-estate market, but you don''t want to overdo it and derail it. What he''s done is very surgical, directed to where it hurts rather than an umbrella response." - Benjamin Tal, chief economist, CIBC World Markets (Montreal Gazette)
"Are we going to see the odd borrower have to come up with more money or not buy they house they want? Absolutely. But will it have a dramatic effect? No." - Peter Majthenyi, mortgage planner, Mortgage Architects (Globe and Mail)
"How the government can go from 100 per cent rental financing (17 months ago) to 80 per cent today is confounding. The intent is understandable, but the government could have increased net worth requirements, increased Beacon minimums, tightened debt servicing guidelines, or limited the number of insured rental mortgages a person can qualify for. Instead, the solution was near-draconian, and it will have an effect on the rental stock in Canada." - Canadian Mortgage Trends
“The Canadian bond market will probably catch a bid [from the policy changes]. So long as you can take any residual Bank of Canada tightening out of the Canada curve, that will be more beneficial than detrimental towards bond yields.” - David Rosenberg, chief economist, Gluskin Sheff & Associates (Bloomberg)
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