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Can we Expect More Mortgage Rule Changes?

Ever since the mortgage rules were changed last summer, people have not stopped talking about them. Were they necessary? Are they too much? Is it now too hard for buyers, especially first-time buyers, to get a mortgage? And most importantly, are any more coming?

The fear that we’ll once again be hit by more mortgage rules comes from the fact that prices still have not dropped (at least not as much as Finance Minister Jim Flaherty was hoping they would) and that consumer debt continues to reach all-time highs. In order to stem the flow of borrowing, and help people get their debt back under control, some think that the government will turn to measures that they’ve turned to four times in just as many years – tightening mortgage rules.

But mortgage broker Paolo Dipetta doesn’t think that will happen.

“Personally I think the government will take more of a hands-off approach this time around, as the market’s already starting to slow” he says. “But it’d be really great to see them do something like offer people tax incentives for paying down large parts of their mortgage.”

David Grossman, from Community Financial Group, agrees.

“There were a number of changes last year regarding the rules. The Bank of Canada had a couple of rounds of tightening with respect to lending on investment properties, maximum amortization on refinances, and the maximum amortization being reduced to 25 years. I don’t think there will be further tightening, rates are still low, and that will keep the market buoyant, reducing the need for further tightening.”

And we don’t think they will either. Putting even lower amortizations into place, or tighter mortgage rules would at this point, many experts believe, cripple the market even further and bring things to a halt. And while consumer debt does need to be stemmed, our housing market also needs to do its part to support the economy. And for the time being at least, experts agree that it will.

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