March 2012 Phew! The recent 2012 Canada budget annoucement did not include any changes to mortgage rules. There was speculation that they might be talk of lowering the amortization from 30 to 25 year or increasing the minimum downpayment requirements up from 5% (for owner-occupied property, rental property minimum remains at 20%).
Over the last 4 years, there have been a number changes to mortgage rules, it seems the government feels that is enough changes for now. Interestingly, Jim Flaherty, the Minister of Finance was recently quoted saying:
“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,” ……”They must forget that they are actually the ones who issue the mortgages,”……. “It’s their market. It’s not my market. They decide what they want to charge in interest rates. They’re the ones who make the profits out of this business, so I do find it a bit much when some of the bank executives turn to the government, the Minister of Finance and say, ‘”You ought to change the rules and make it tighter.”’
No one is stopping lenders from making their own policies, beyond what is stipulated by the government. If lenders feel things are too risky, they can make their policies stricter, you don’t necessarily need government intervention for that. The mortgage market is filled with many lenders, some have more flexible policies than others, it comes down to a business decision on each company’s part. Certainly, if the retail banks decide to make their policies stricter, in lieu of not receiving any new mortgage rules from the government, you will most likely see another mortgage lender market emerging that can accommodate for the consumers that can’t fit their model. Competition is good, this could be good for consumers.
You can check out the highlights of the 2012 budget here: