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The recent surge in home prices has a federal regulator reminding lenders to stay sharp, but it is also prompting concern that borrowers may be stretching themselves financially and, in some cases, stretching the truth when they apply for a mortgage.
One Canadian mortgage brokerage told the Financial Post it has recently uncovered a rash of suspicious employment letters submitted by individuals trying to obtain loans in the Greater Toronto Area.
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Canada Regulator Eyes Tougher Mortgage Rules Amid Bubble Fears
Theophilos Argitis, Bloomberg News A For Sale sign in front of a home in the York neighborhood of Toronto, Ontario, Canada, on Thursday, March 11, 2021. The buying, selling and building of homes in Canada takes up a larger share of the economy than it does in any other developed country in the world, according to the Bank of International Settlements, and also soaks up a larger share of investment capital than in any of Canadaâs peers. Photographer: Cole Burston/Bloomberg , Bloomberg
(Bloomberg) Canadaâs bank regulator is proposing to tighten mortgage qualification rules to make it more difficult for home buyers to secure financing, a move aimed at easing financial stability risks stemming from a booming real estate market.
Trudeau Likely Just Getting Started on Housing Tweaks
Bloomberg 2 hrs ago Ari Altstedter
(Bloomberg) Almost as soon as it was announced, the Canadian government’s first attempt to rein in the country’s pandemic housing boom was dismissed as not enough.
Canada’s banking regulator signaled its intent Thursday to take a small step by tightening qualification rules for uninsured mortgages, worried that low interest rates will put new home buyers too far into debt. The move will effectively reduce by about 4% the size of mortgages households will be eligible to take.
With buyers straining ever more to get in amid the frenzy, expectations are building that move will be only the first step in Prime Minister Justin Trudeau’s efforts to keep a long-feared housing bubble from forming, and popping, on his watch. To do so, his government must bring the one part of the economy that’s at a boil down to a simmer, without triggering a sharp correction that could
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Rock-bottom interest rates that have helped prop up the Canadian economy during the pandemic are also helping fuel frenzied activity in the housing market, putting policymakers and regulators in something of a bind when it comes to what they can or should do to address the red-hot sector.
Housing prices have been surging in recent months, driven up by a combination of those record low rates, increased household savings and a desire for more space. And while that may be good for owners, it makes for a growing challenge for buyers, who are taking on larger debt burdens that could be harder to handle if rates rise again.
Article content
Almost as soon as it was announced, the Canadian government’s first attempt to rein in the country’s pandemic housing boom was dismissed as not enough.
Canada’s banking regulator signalled its intent Thursday to take a small step by tightening qualification rules for uninsured mortgages, worried that low interest rates will put new home buyers too far into debt. The move will effectively reduce by about 4 per cent the size of mortgages households will be eligible to take.
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