PM says news rules must ensure viable mortgage and property market

PM says news rules must ensure viable mortgage and property market

Paul Vieira, Financial Post · Friday, Jan. 14, 2011

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OTTAWA — Prime Minister Stephen Harper said Friday his government would look at whether any new rules were necessary to ensure Canada was able to maintain a “viable” mortgage and real estate market.

However, the Prime Minister, in Montreal for an aerospace announcement, declined to address a National Post story that Ottawa was looking to target the condominium market with specific measures that would make it tougher to qualify for a loan on a high-rise apartment.

Sources told the Post the rules being discussed would add 100% of condominium fees to the list of expenses that is measured against income to decide whether a buyer can afford a mortgage. Furthermore, the government is considering whether to increase the minimum down payment required to purchase a home, from 5% to 6% or 7%.

The measures, should they come to pass, would be aimed at capping growth in household debt levels, which reached a record high in the third quarter — the equivalent to 148% of disposable income. The International Monetary Fund recently said household debt levels represents the No. 1 risk to the Canadian economy.

“The Minister of Finance has been clear the government remains concerned about growth in the level of household debt and will look at taking prudent steps to moderate that growth,” Mr. Harper said.

“We will look at what steps may or may not necessary… Nobody should be under any fear. We have a viable mortgage and housing market in [Canada] and we want to make sure that continues to be the case going forward.”

Asked about measures specifically aimed at the condo market, Mr. Harper said: “I am not going to feed those particular rumours. I know those rumours are out there.”

Initiatives aimed at addressing excessive risk-taking by households could be included in the coming federal budget, which is likely be tabled in February or March.

 

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