Aug
07

My Reaction To The CMHC News From Yesterday

Some more big mortgage news came down the pipe out of nowwhere yesterday morning when it was announced that CMHC would limit each lender’s loan portfolio of CMHC-insured loans to $350,000,000 per month, until it decided how to best proceed moving forward. This is in reaction to the news that almost 80% of the lending limit set up for the year has already been reached, just halfway through 2013. What does it mean? Means we Canadians like to keep borrowing, we are defying the market analysts who have long predicted a market correction and/or “crash” (to sell newspapers), means we are borrowing smartly with a great majority of borrowers locking in at-or-around 3% for 5-year fixed money (cheap, long-term), and means we are continuing to buy and sell and renovate and refinance regardless of what our newspapers tell us and what our Finance Minister tells us to do.

Which brings me to the crux of my point. I won’t go on about what this really means because my colleague Gord McCallum from First Foundation did an amazing job in his blog (check it out here: http://www.firstfoundation.ca/blog/why-did-cmhc-cap-mortgage-guarantees/). He runs it down pretty well and I love his tongue-in-cheek style. My point however is to expand on his thoughts in a different way: that is, that Finance Minister Jim Flaherty has been bringing down the hammer on the real estate market, rightly or wrongly, but bringing it down in a less-transparent way each time. Hiding behind such comments as “we want to cool the market to protect the taxpayers” (and I am paraphrasing), I feel he is starting to overstep his bounds and limits by placing undue pressure on the lenders, the insurers, and as a result you the borrower, into what we can and cannot do. Bringing politics into the…

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