The home loans backed by the Canada Mortgage and Housing Corp. (CMHC) and supported by the federal government may not be sustainable in the long run. Worse, they may become liabilities that can become a burden to taxpayers. In response to this unsettling trend, Finance Minister Jim Flaherty has issued a statement that he will take the necessary steps if government insurance on mortgages needs to be reduced.
The CMHC-supported loans have been growing steadily the past years and increased by 100 percent in 2013, despite regulations introduced to curb the market. The Canadian Real Estate Associaton has pegged the increase of a typical Canadian home in 2013 at 4.6 percent.
In his statement to media, Flaherty said, “Regrettably, CMHC became something rather more grand … than it was intended to be. We’ll see over time what that role should be.”
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