Investors may face budget blues

“In terms of mortgage insurance rule changes, given his announcement last week, I believe the Minister will continue to monitor,” Jim Murphy, CEO of the Canadian Association of Acredited Mortgage Professionals, told “There are unlikely to be changes in the budget, however, this does not prevent the government from acting in the future if they feel tightening is required.”

The comments comes after weeks of industry lobbying in Ottawa, largely led by CAAMP, and focused on encouraging Finance Minister Jim Flaherty to leave the mortgage rules around amortization, down payments and other key areas unchanged.

Murphy argues that those efforts have had a tangible effect, despite the number of bank economists asking for tighter rules. Those more-rigid requirement could stem the flow of renters now moving to homeownership.

“CAAMP’s overall message of not instituting changes that cause a housing downfall or that adversely affect job creation are being well received,” said Murphy, who’ll be in Ottawa for Thursday’s budget announcement.

Exactly a week prior to the scheduled communiqué, Flaherty used a media scrum to suggest he would resist calls for stricter rules, namely, a reduction of the maximum amortization to 25 years and an increase in the minimum  down payment to 7 per cent or 10 percent. He also criticized the banks for creating the kind of ultra-low rate environment driving up household debt levels and, possibly, the need for tighter mortgage rules.

“I find it a bit off that some of the bank executives are taking the position that the Minister of Finance or the government somehow should tell them how to run their business,” Jim Flaherty told reporters just outside Ottawa Thursday. “They decide what they want to charge in interest rates.

"The new housing market produces a lot of jobs in Canada so there’s a balance that needs to be addressed."

Still, Murphy is anticipating the minister will introduce some new rules to clamp down on mortgage growth.

“I’m expecting there to be legislation on covered bonds,” he told “This is a relatively new funding source in Canada and the question will be whether these products can be insured.

“Given current messaging out of Ottawa, I expect them not be eligible for mortgage insurance coverage.”

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