Joe Oliver Says Canada Won’t Make Major House Finance Changes

Major changes to the rules governing Canada’s mortgage-financing regime aren’t in the offing, Canadian Finance Minister Joe Oliver said Sunday, as he played down suggestions Ottawa is looking to force the country’s banks to bear more housing risk.

The federal government provides mortgage insurance through Canada Mortgage and Housing Corp (CMHC) to qualified home buyers who make a down payment of less than 20%. Canadian banks rely on this government-backed insurance to reduce the risk on their balance sheets.

“We do over the longer term want to reduce the government involvement in the mortgage market, not eliminate it, but reduce it gradually. We do not have in mind any major moves in this regard,” Finance Minister Joe Oliver told reporters on a call following a Group of 20 meeting in Australia.

“Anything that we might consider would be of a marginal nature like some of the steps that have been taken. There have been quite a few of them as you know over the last five years or so to take the froth out of the market.”

The Conservatives have tightened eligibility for this type of government-backed mortgage insurance several times, hoping to push more marginal buyers out of the market and cool the housing market boom – fuelled by low borrowing costs – that has followed the financial crisis.

On Friday, CMHC Chief Executive Evan Siddall said the federal housing agency was looking at ideas to improve the housing finance system, including risk-sharing with lenders.

Agencies/Canadajournal