The irony that bankers dangling some of the lowest rates in history are also asking Ottawa to tighten mortgage rules hasn't been lost on the Finance minister, now suggesting he'd rather sit pat.
“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. “It’s their market. It’s not my market.
“They decide what they want to charge in interest rates.”
While analysts are still parsing through those comments, a consensus is emerging that the government will hold off on further tightening of the country’s mortgage rules, at least for now.
TD’s chief economist, among others, had urged Flaherty to use his budget address next week to announce one of three moves to slow demand for housing.
On Thursday, the Minister hinted at none of those – a shorter amortization, a higher minimum down payment or new stress tests for borrowers.
“With respect to tightening up the mortgage insurance market we’ve done it three times,” he said. “If we have to tighten it some more we will,” he said. “I’d like the market to correct itself, quite frankly, if it can.”
That likely answers broker prayers. Most have been hoping the government would let the current bull market exhaust itself rather than rein it in, potentially boxing in the country's housing industry.
"The new housing market produces a lot of jobs in Canada so there’s a balance that needs to be addressed," Flaherty said.
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