Changing amortization, cap on insured mortgages not the answer to affordability: CMHC
Changing amortization, cap on insured mortgages not the answer to affordability: CMHC
TORONTO — The head of Canada's housing agency says measures such as extending mortgage amortizations and changing the threshold to qualify for an insured mortgage are not the answer to the country's housing affordability challenges. Even though homeowners have seen a rapid increase in what they are ...
The head of Canada's housing agency says measures such as extending mortgage amortizations and changing the threshold to qualify for an insured mortgage are not the answer to the country's housing affordability challenges.
Even though homeowners have seen a rapid increase in what they are paying to cover mortgages as interest rates have risen, Canada Mortgage and Housing Corp. president and chief executive Romy Bowers is not in favour of allowing borrowers to repay their mortgages over longer periods of time.
"That just makes credit more available," she told The Canadian Press.
I found this interesting, but not at all surprising:
Bowers' view is partly based on what happened in the U.K., where the government introduced a program that gave first-time homebuyers in London "generous" down payment grants.
When the program was later assessed, Bowers explained, they found the prices of starter homes had gone up by the exact amount of the government subsidy, essentially wiping out any affordability gains.
Its almost as if capitalism doesn't have the individual's best interest at heart.
CMHC says the focus right now must be on increasing the number of available homes, since a shortage is what's driving prices higher. "What you need to do is make more supply and make it a more balanced market and have more housing at different price points, so that people don't have to spend so much money on mortgage debt."
Sounds reasonable to me. Allowing people to sign up for 30, 40, 50 year mortgages isn't the solution to increasing housing costs.
CMHC doing something right. Wooooo