The Financial Post reports in its Wednesday, April 21, edition that Canada's banking regulator's first attempt to rein in the country's pandemic housing boom has been dismissed as not enough.
A Bloomberg dispatch to the Post reports that the regulator has tightened qualification rules for uninsured mortgages, which effectively reduces by about 4 per cent the size of mortgages households will be eligible to take. Expectations are building that the regulator's move will be only the first step in an effort to keep a housing bubble from forming, and popping.
To do so, Ottawa must bring the one part of the economy that is at a boil down to a simmer, without triggering a sharp correction that could disrupt the nation's recovery.
The value of Canadian residential real estate has surged 17 per cent in the last 12 months. One observer says a lot of things can "go wrong when home prices are going vertical." Bank economists have been some of the loudest voices calling for the government to cool the housing market immediately. They say more is needed. BMO is dubious the market will "change all that much." National Bank of Canada economists doubts current efforts "will significantly cool the housing market."
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