Government Considering Change in Mortgage Rules

Posted by Alan Zunec on Monday, March 26th, 2012 at 7:07am.

The government is considering changing the mortgage rules yet again. But, according to figures from Stats Canada, the household credit index fell from 151.9 percent to 150.6 percent during the third quarter. That debt includes not only mortgages, but consumer credit and various loans. Apparently Canadians are becoming slightly more conservative as far as spending goes.

At the same time the overall debt load did increase, going from $1.59 trillion to $1.6 trillion in that same quarter. The saving grace was that the increase in disposable income was greater. It is this rising income that has the Canadian government reconsidering the rules change.

Mortgage firms, and certainly the real estate industry as a whole would like the rules to remain the same. But Jim Flaherty, Finance Minister is considering making default insurance more expensive and lowering the maximum amortization period to 25 years on insured mortgages. The move would be to rein in consumer spending.

A survey conducted last month for Reuters indicated that many strategists and economists believe that Ottawa will change the rules within the next year. The Central Bank had already decided to keep its overnight industry static, and BMO introduced, yet again, the low 2.99 percent interest rate for their five year fixed mortgages. The government is concerned that both of these moves may encourage more spending, not less.

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