Mortgage Rules Tightening Again?

The rates are again at all time low and there are some rumors about the Bank of Canada tightening their mortgage rules again.

The Financial Post has pointed out that most of the speculation comes from the remarks made by the Bank of Canada governor,

“Canadian household balance sheets are becoming increasingly stretched,” said Mark Carney, who issued a warning to legislators about taking steps to contain the growth of personal debt. “Historically low policy rates, even if appropriate to achieve the inflation target, create their own risks.”

Some of the ways the rules might be tightened, as explained by the Cheif Economist of TD, are:

– decrease the income/debt servicing ratios
– further lower amortizations
– increased the minimum down payment

This change would be considered to lower consumer borrowing as personal debt is growing in Canada.

But, as the article points out, the recent GDP data shows a slow down in the real estate, as well as the average price and sales are down from a year ago.

I do not foresee changes to the mortgage rules in the near future, as the real estate market is finding a new balance in the recovering economy; unless we see the low rates spark another “hot” housing market for a sustained period of time.

Read the full article here Financial Post