A clear mortgage policy

The Canadian housing and mortgage markets receive extensive attention by economists, analysts and the media. The purchase of a home, after all, is the largest financial commitment that an individual will make in his or her lifetime.

Since 2008 and the height of the financial crisis, the federal government has been active from a policy perspective in making sure that the housing market does not overheat or enter what some describe as a “bubble”. It has done this for two reasons. First, interest rates have remained stable, indeed at record lows, for five years. Rising interest rates would in and of themselves moderate housing activity. This variable is absent.

But secondly, the government is concerned about its exposure to the real estate finance system. Or, to be more political, the exposure of the Canadian taxpayer to the housing market. In a way, this does not have anything to do with whether the housing market is up or down or whether resales have hit a record high or a record low. It has to do with the role of the federal government in backing various financial mechanisms that support the mortgage market. It wants to reduce its exposure in the mortgage market and, by extension, to increase the role of the private sector.

Click here to read the full A clear mortgage policy opinion piece in the Financial Post from CAAMP President & CEO Jim Murphy.