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Ottawa acts to slow down borrowing on homes, limit consumer loans


KFRCanuk
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ScorpionCapital:

 

I'll take the bait ...

 

a) I just wish the financial press would highlight more that these recent "new" rules/limits are just re-introductions of old rules that seemed to work well for the longest time without promoting overindebtedness.   The Winnipeg Free Press article was one of the few I read today which noted (quite rightly) Scott Brison's observation of such.

 

b) In terms of capitalism vs socialism ... actually you could argue that the feds are moving more towards capitalism, as "it will no longer insure lines of credit secured on homes as if they were mortgages, which should put pressure on banks to increase their standards when it comes to deciding who qualifies for such loans".   Bank accountability ... who'd a thunk that would be a good idea

 

 

 

 

 

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I'll take the bait as well.  This action by the finance minister ensures that mortgages will stay in the private sector rather than becoming property of the federal government.  In its usual balanced fashion Canada has managed to keep a degree of socialism and protect its capitalism at the same time. 

 

The US, under the GOP, managed to successfully socialize the entire housing sector of the economy by implicitly underwriting the housing sector since the early 00s.  The result is that uncle Sam now owns the majority of the mortgage issuance in the US.  If you keep going down one path it appears you end up somewhere you didn't want to be.

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ScorpionCapital:

 

I'll take the bait ...

 

a) I just wish the financial press would highlight more that these recent "new" rules/limits are just re-introductions of old rules that seemed to work well for the longest time without promoting overindebtedness.   The Winnipeg Free Press article was one of the few I read today which noted (quite rightly) Scott Brison's observation of such.

 

b) In terms of capitalism vs socialism ... actually you could argue that the feds are moving more towards capitalism, as "it will no longer insure lines of credit secured on homes as if they were mortgages, which should put pressure on banks to increase their standards when it comes to deciding who qualifies for such loans".   Bank accountability ... who'd a thunk that would be a good idea

 

 

 

I agree.  For the taxpayers' sake, governments should get completely out of the mortgage business.  It is really this "assistance" that inadvertently pushed housing prices higher and neglected the effect of the original help.

 

 

 

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I think this action is still too late. If you really want to keep the government out of mortgages, they should get rid of CMHC completely and outlaw mortgage insurance. Require 25% down, max 25 year am and require Canadians to qualify for a 25 year fixed rate. If they did this now, they'd crash the markets in Van, Calgary, Saskatoon, Regina and Toronto, which wouldn't necessarily be a bad thing.

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