IMF warning rattles flippers

“Thus far, mortgage credit growth has slightly decelerated in response to the measures taken by the authorities, including tighter mortgage insurance standards,” the International Monetary Fund writes in a global economic report released Tuesday. “If household leverage continues to rise, additional measures may need to be considered.”

It’s one bugaboo that scares almost all investors focused on flipping, especially condo buyers looking to sell before even taking possession. Any move to further apply brakes to the real estate market would likely deepen the correction several key Canadian markets are now grappling with.

RealNet’s index price for new units in the Greater Toronto Area fell nearly 5 per cent in August from a year ago to $436,460. The number of sales also took a dive, sliding to 645 from 1,967.

That’s particularly bad news for condo investors, but any move by the federal government to further tweak mortgage rules would likely exacerbate those woes.

Still, the IMF’s tentative caution seems unlikely, said one economist Tuesday pointing to real signs that consumers are rapidly de-accelerating in the race to take on new debt. It currently sit at an average of 152 per cent of household income.

But some investors may well welcome the introduction of tighter mortgage rules around amortization and LTVs as a way of bolstering rental unit demand and prices.

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