I think it is a fairly well known fact that there are some areas in Canada’s housing market today that are extremely overvalued. I’m no economist, but I think most people have read or heard enough to realize that something needs to be done to try and soften the landing of this bubble that eventually has to burst.
Minister of Finance Bill Morneau should be given some credit for at least acknowledging that there is a problem and that something needs to be done about it. However, I don’t see why it is being done in such a way that harms the very same middle class that the Liberal government constantly brags about helping.
With the new lending restrictions imposed by the Liberal government (without any consultation with consumers or industry experts), Canadians applying for any insured mortgage now have to be approved at an astronomical interest rate of 4.64 per cent – roughly double the going interest rate for five-year fixed mortgages.
This will push home ownership back by years for young Canadians and may push it right out of reach for some. Existing homeowners who have built up equity in their homes are virtually unaffected.
I can see that this may gradually bring home prices down over time, but couldn’t the finance minister, supposedly the smartest person in the country on these types of issues, have thought of something that hurts the evil 1% instead of Canada’s middle class and young people?