boc-hints-at-mortgage-tightening

In the past few years, the Minister of Finance has been imposing tougher lendering rules making it much harder for the average person to qualify for a mortgage. Even though interest rates are at an all time low, it’s a very good idea to have all of your ducks in a row before writing an offer to purchase, refinancing or renewing.

Getting preapproved could save you a big headache when it comes time to finalizing your mortgage. I recommend having all your documentation reviewed in advance because what you think was acceptable a few years ago, may require more paperwork and could leave you scrambling to meet your financing conditions.

Below is an article I found interesting yesterday. I encourage you to read it and let me know your thoughts!

Marla Daniels

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BoC Hints at Mortgage Tightening
by Jamie Henry | 23 Sep 2014

The Bank of Canada believes regulation and supervision – not monetary policy – are the keys to aiding economic recovery. Is this a hint at further housing finance tightening?

“We have made it clear that household imbalances are at the top of our list of vulnerabilities. But monetary policy is not the primary tool to address these risks,” Carolyn Wilkins, senior deputy governor for the Bank of Canada said in a speech Monday. “Regulation and supervision, along with targeted macroprudential actions, are more effective lines of defense.”

While Wilkins doesn’t outright point to mortgage rule tightening, her footnotes following a statement that “defenses have been strengthened a number of times since 2008” point to exactly that sort of tinkering.

“The Minister of Finance has tightened mortgage insurance rules, the Superintendent of Financial Institutions has developed stronger mortgage underwriting principles and the Canada Mortgage and Housing Corporation has improved its programs,” the footnote and the end of the speech transcript reads.

This, however, follows Finance Minister Joe Oliver’s statement that the government will not make any rash decisions when it comes to reining in the housing market.

“We’re looking at things, but we’re not going to be doing anything dramatic,” Oliver said in an interview in Cairns, Australia on Friday, according to the Financial Post. “We don’t see the need for it.”

Wilkins’ speech was given about the underwhelming economic recovery seen since the 2008 recession.

“Our approach is to consider the main sources of uncertainty in our deliberations on how best to achieve our inflation target,” Wilkins said. “This helps us avoid making big errors that are difficult to correct.

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