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Canada tightens mortgage rules, says no bubble yet
2 hours ago - Reuters
Canada tightens mortgage rules, says no bubble yet
By Ka Yan Ng
TORONTO (Reuters) - Canada will bring in new mortgage rules to cool the country's red-hot housing sector, citing the need to prevent a property price bubble even as it gave assurances the market is stable.
Finance Minister Jim Flaherty said on Tuesday he was concerned that new homebuyers may overextend themselves and also wanted to discourage the "tendency by some to use their homes as an ATM machine."
"Today's measures are part of a larger picture. We will continue to closely monitor developments in the housing sector in Canada," he told a news conference in Ottawa.
"There is no compelling evidence of a housing bubble, but we're taking proactive, prudent, measured and cautious steps today to help prevent a housing bubble."
Flaherty announced three changes to the rules for government-backed insured mortgages he hopes will prevent the kinds of problems that caused the U.S. housing market collapse and triggered the global financial crisis.
The changes, which come into force April 19, include the requirement that borrowers will need the resources to qualify for a five-year fixed-rate mortgage even if they go with a lower variable rate.
The government will also lower maximum amounts that can be withdrawn when borrowers refinance mortgages to 90 percent from 95 percent of the value of their homes. And it will require a minimum downpayment of 20 percent for insured mortgages tied to non-owner occupied properties bought for speculation.
As housing prices and sales gather speed, some economists have warned of a possible housing bubble in which home buyers take on more debt than they will be able to handle when interest rates rise, leading to an eventual collapse that could hamper the economic recovery.
Canada's housing market has proven resilient in the face of the otherwise tepid economic recovery, partly spurred on by ultralow interest rates.
Flaherty described the housing market as "healthy and stable" and said that the government's early action can help prevent negative trends from happening.
Bank of Canada Governor Mark Carney has also recently said he did not see evidence of a housing bubble, downplaying fears of a Canadian version of the U.S. subprime mortgage meltdown.
One economist said only one of the three adjustments to mortgage rules was a material change.
"The requirement that you have to now qualify at the 5-year instead of the 3-year rate will have a dampening effect on mortgage and housing markets," said Derek Holt, economist at Scotia Capital.
"The other rule changes are more about optics than about any potentially significant effects."
The changes add to other moves the government has made in the last few years after housing markets other countries, notably the United States, went into a tailspin because of subprime mortgage lending.
That sort of risky lending had never been a large slice of the Canadian market, but the government moved in 2008 to pare back the maximum amortization period for new government-backed mortgages to 35 years from 40 years, and said it required a minimum down payment of 5 percent where none was previously needed.
Bank of Montreal, while noting it did not believe the country faced a housing bubble, said it supported the government's actions.
(Additional reporting by Claire Sibonney and Scott Anderson; Editing by Jeffrey Hodgson)
2 hours ago - Reuters
Canada tightens mortgage rules, says no bubble yet
By Ka Yan Ng
TORONTO (Reuters) - Canada will bring in new mortgage rules to cool the country's red-hot housing sector, citing the need to prevent a property price bubble even as it gave assurances the market is stable.
Finance Minister Jim Flaherty said on Tuesday he was concerned that new homebuyers may overextend themselves and also wanted to discourage the "tendency by some to use their homes as an ATM machine."
"Today's measures are part of a larger picture. We will continue to closely monitor developments in the housing sector in Canada," he told a news conference in Ottawa.
"There is no compelling evidence of a housing bubble, but we're taking proactive, prudent, measured and cautious steps today to help prevent a housing bubble."
Flaherty announced three changes to the rules for government-backed insured mortgages he hopes will prevent the kinds of problems that caused the U.S. housing market collapse and triggered the global financial crisis.
The changes, which come into force April 19, include the requirement that borrowers will need the resources to qualify for a five-year fixed-rate mortgage even if they go with a lower variable rate.
The government will also lower maximum amounts that can be withdrawn when borrowers refinance mortgages to 90 percent from 95 percent of the value of their homes. And it will require a minimum downpayment of 20 percent for insured mortgages tied to non-owner occupied properties bought for speculation.
As housing prices and sales gather speed, some economists have warned of a possible housing bubble in which home buyers take on more debt than they will be able to handle when interest rates rise, leading to an eventual collapse that could hamper the economic recovery.
Canada's housing market has proven resilient in the face of the otherwise tepid economic recovery, partly spurred on by ultralow interest rates.
Flaherty described the housing market as "healthy and stable" and said that the government's early action can help prevent negative trends from happening.
Bank of Canada Governor Mark Carney has also recently said he did not see evidence of a housing bubble, downplaying fears of a Canadian version of the U.S. subprime mortgage meltdown.
One economist said only one of the three adjustments to mortgage rules was a material change.
"The requirement that you have to now qualify at the 5-year instead of the 3-year rate will have a dampening effect on mortgage and housing markets," said Derek Holt, economist at Scotia Capital.
"The other rule changes are more about optics than about any potentially significant effects."
The changes add to other moves the government has made in the last few years after housing markets other countries, notably the United States, went into a tailspin because of subprime mortgage lending.
That sort of risky lending had never been a large slice of the Canadian market, but the government moved in 2008 to pare back the maximum amortization period for new government-backed mortgages to 35 years from 40 years, and said it required a minimum down payment of 5 percent where none was previously needed.
Bank of Montreal, while noting it did not believe the country faced a housing bubble, said it supported the government's actions.
(Additional reporting by Claire Sibonney and Scott Anderson; Editing by Jeffrey Hodgson)
кэш это ведь просто бумага, гарантированная государством. а при дефляции (снижении цен на активы) государство долго гарантировать ценность бумаги не сможет.