Tightening mortgage lending conditions would have a significant negative impact on the housing market and is not necessary according to the body representing mortgage professionals.
In a report titled Looking for Balance in the Canadian Housing and Mortgage Markets, Mortgage Professionals Canada says that there is insufficient proof that a bubble exists in the market.
MPC economist Will Dunning says that in the low interest rate environment, house prices have risen due to the “affordability space” that the rates have created.
"Economic fundamentals can change," says Dunning. "One of those fundamentals is availability of finance. There is a risk that changes in policies of lenders or mortgage insurers that reduce access to mortgages could cause an unnecessary drop in housing demand and housing prices, and bring consequent economic damage."
He said that the housing market is a major driver of Canada’s economy and any tightening of policy has the “potential to cause a sharp downward adjustment of prices."
In a report titled Looking for Balance in the Canadian Housing and Mortgage Markets, Mortgage Professionals Canada says that there is insufficient proof that a bubble exists in the market.
MPC economist Will Dunning says that in the low interest rate environment, house prices have risen due to the “affordability space” that the rates have created.
"Economic fundamentals can change," says Dunning. "One of those fundamentals is availability of finance. There is a risk that changes in policies of lenders or mortgage insurers that reduce access to mortgages could cause an unnecessary drop in housing demand and housing prices, and bring consequent economic damage."
He said that the housing market is a major driver of Canada’s economy and any tightening of policy has the “potential to cause a sharp downward adjustment of prices."
