Wednesday, June 20, 2012

Wed Post #2: Is the 30 Year Mortgage about to get axed?

Speculation is racing around the real estate community that Federal Finance Minister Jim Flaherty is about the axe the 30 year mortgage in Canada.

About an hour ago (at 5:19 PDT), Reuters made the following announcement:
Flaherty news conference at 8:15 a.m. (1215 GMT)

* Canada economy strong but faces big risks

(Reuters) - Canadian Finance Minister Jim Flaherty will make an announcement on Thursday at 8:15 a.m. (1215 GMT), the Department of Finance said on Wednesday evening without providing any details.

Flaherty will hold a news conference in Ottawa at that time, according to the brief statement.

Officials at the Finance Ministry did not immediately reply to requests for additional information and officials at Prime Minister Stephen Harper's office declined to comment.

Flaherty, who has been finance minister since 2006, faces a raft of domestic and international challenges to an economy that remained relatively healthy through the global financial crisis, including a strong housing market that some economists now fear is overheating.

He has just returned from Mexico where he accompanied Harper at a summit of the Group of 20 industrialized and developing nations, which focused on the European debt crisis.
A number of blogging sites are now speculating that Flaherty will end the 30 year amortization, bringing conditions full circle.

It was the increasing of the amortization from 25 years up to 30, then 35, then 40 years which many argue ignited the housing bubble.

We will see tomorrow.


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  1. Globe and Mail: Ottawa tightening mortgage rules; no more 30-year amortizations

    8-o !

  2. It is one thing for Vancouver to go bubbly, quite another if the same ailment attacks Toronto.

    This change is designed to head off the possibility that Central Canada becomes as vulnerable as other parts of the country to a potentially ugly downturn that is coming for the economy.

    So where do you draw the line? A lot of people want to blame the government but they usually don't have any perspective on the rationalization for low interest rates to begin with.

    They usually forget (or never even knew) that the phenomenon was an act of global cooperation agreed to by Finance Ministers and governments all over the planet. We call those rates emergency rates for a reason. The idea was to contend with a crisis that threatened global credit markets and so the actions, while swift, were not overly precise.

    But it had to be done. We should be grateful the problem was contained. It strikes me as totally pointless to point fingers and blame one or two individuals when in fact the action was the result of a collective of hundreds of people from all the major nations.

    It is a waste of breathe to try to tell fools who don't care to hear the trught though. They all forget so quickly.