“We believe today's announcement is a measured response to the government's often stated concern about household debt levels and the housing market,” Canadian Real Estate Association President Wayne Moen. “That being said, we would remind the government that the re-sale housing market makes a significant contribution to the economy, adding an estimated $20 billion in spin-off spending and over 165,000 jobs in 2012.”
The statement comes on the heels of a press conference by Finance Minister Jim Flaherty Thursday, announcing key changes to mortgage rules, including lowering the maximum amortization on a government-insured mortgage to 25 years.
The government will also cap refinances at 80 per cent of a home's value and set a $1-million ceiling for homes eligible for government-backed insurance. Also effective July 9, it will restrict all would-be borrowers from mortgage insurance if their maximum gross debt service ratio exceeds 39 per cent and their maximum total debt service ratio rests above 44 per cent.
CREA unlike other key real estate professions, including mortgage brokers, generally embraced the government’s move as a way to tamp down on the growth in household debt levels, now averaging 152 per cent of income.
Still, the association wants the government to think twice before moving again to switch up the rules by which their clients must play.
“Recent statistics from CREA indicate that the national housing market remains balanced,” writes Moen. “The impact of measures like those announced today must be closely monitored to ensure they have the anticipated impact and don't create a spillover effect and slow the economy.”
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