I always try to keep my eye on media and what stories are making headlines in Business, Finance  and Real Estate sections of our National papers and magazines.

I even schedule Google Alerts to email me new articles focused on several different topics including Canada’s real estate market as a whole so I can read these stories as they are published.

For this week’s blog post I thought I’d share with you three articles that reached my inbox this week. All three articles discuss the slowdown in the housing market we are noticing across Canada and how the changes in mortgage laws may be one of the reasons fewer homes are selling.

(If you need a quick reminder of the changes to mortgage laws that took effect in July, read my Canada Mortgage Law Changes 2012 article.)

“Canada’s tighter mortgage rules: How far is too far?”

This article published in Yahoo! Finance Canada questions the decision our Finance Minister Jim Flaherty made to tighten mortgage laws and whether or not he “unnecessarily put the economy in peril by clamping down too hard on mortgage rules.”

The report written by the Canadian Association of Accredited Mortgage Professionals’ chief economist Will Dunning suggests that the slowdown in housing activity because of the change to mortgage laws risks tipping the Canadian housing market into unbalanced conditions.

However, David Tulk who is the Chief Canada macro strategist for TD Securities argues that as long as interest rates remain low (which they have) and as long as our employment rate remains relatively stable, housing activity will adjust as Canadians get used to the new rules of the game.

“Mortgage rules hinder first-time buyers”

This article published in the Vancouver Sun makes several good points:

  • The drop is housing sales is a net effect caused by both a slowdown in sales and the mortgage policy changes.
  • First time buyers have been hardest hit by the 25 year amortization period and the fact that there are fewer first-time buyers out there looking for their first home is affecting resale market (fewer new buyers coming into the market).
  • Will Dunning, mentioned in the above article, feels that 30 year amortizations should be returned because the housing market was healthy prior to the policy changes.

Despite these claims Jim Flaherty says the new mortgage rules are designed to protect Canadians was potentially dangerously high personal debt ratios. If interest rates increase Canadians with high debt levels risk not being able to carry and fund their debt.

“As tougher mortgage rules slow housing market,
critics call for a reversal”

This article published by the Financial Post presents the perspective held by Finance Minister Jim Flaherty and Benjamin Tal, the deputy chief economist at CIBC World Markets.

Flaherty has not suggested any reversal of tightened mortgage restrictions or that the changes in rules have caused the slowdown in the housing market. Rather, an overall fatigue from consumers in terms of real estate is causing the slowdown.

Tal backs him up saying that the government is not responsible. He reminds Canadians that the housing market was already slowing when the new mortgage laws were introduced. He says, “In a slowing market, it is that much more effective. It was a prudent move.”

The natural slowing market we are experiencing now is probably slowing at a quicker pace than expected and asking us to keep in mind what could happen if interest rates rise or other factors start to impact the market.

Insert Your Opinion Here …

What is your opinion of this newsworthy topic?

Potential Home Buyers – Do the changes to mortgage laws impact your decision of when to buy and your budget for buying a home?

Current Home Owners – How does all this speculation in the housing market make you feel about your investment?

Fellow Real Estate Agents – What is your opinion of your local real estate market right now?

I would love to speak with you further about this topic and about how you can use the current economic time to work in your favor for buying or selling a home. Call me at 778-316-4290, send me a quick email at Natasha@natashataylor.ca or connect with me on my Facebook Page.

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