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Notable News of the Week: November 2, 2012

Finance official questions link between cooling housing market and mortgage rules – The Globe and Mail

Canada’s deputy minister of finance, Michael Horgan isn’t convinced there is a link between the new tighter mortgage rules, introduced in July of this year, and the recent cooling in the housing market. “There’s some evidence that the housing market…is cooling and slowing at the moment,” he said in a rare public speech at Carleton University. Horgan went on to say that “it’s too early to make the direct link.” These comments are likely a response to economists who have already claimed that policy changes have impacted the housing market, including Benjamin Tal of CIBC and Gregory Klump of the Canadian Real Estate Association. The deputy minister of finance agrees that there is likely some cause and effect at this point, but attributed most of the market cooling to Canadians starting to reign in their debts. Jim Flaherty echoed his deputy’s comments, stating that the full impact of the mortgage rule changes have yet to be felt.

No U.S.-style housing market meltdown for Canada: CIBC – Calgary Herald

While there are a number of concerns regarding Canada’s current housing market, a U.S.-style housing market meltdown is not one of them. A report released on Tuesday by CIBC World Markets revealed that, despite Canada reaching the record debt-to-income ratio the U.S. had in 2006, the Canadian economy plus tighter mortgage lending rules are much better than what the U.S. was faced with before its crash. Benjamin Tal, deputy chief economist at CIBC, says “house prices in Canada will probably fall in the coming year or two, but any comparison to the American market of 2006 reflects deep misunderstanding of the credit landscapes of the pre-crash environment in the U.S. and today’s Canadian market.” Currently, one major concern is current home prices and the recent slowing of sales, which could result in a price adjustment.

Toronto home values up 22.8% since 2008, property taxes could rise in step – Canadian Business Magazine

Housing prices in Toronto have seen a meteoric rise over the past four years and it appears the increase in property value is not without a price. The Municipal Property Assessment Corp. (MPAC) said home values in Canada’s largest city have risen 22.8 per cent since 2008 and property taxes could increase as a result. The Ontario Corporation said they will phase-in the increase over a period of four years, averaging 5.5 per cent every year. Unfortunately, a tax increase could squeeze the budgets of homeowners struggling to pay off their debt. The most recent appraisal was done in January 2012, so a  tax hike based on that assessment date could end up hurting homeowners over the four-year incremental phase-in period due to Toronto home values sitting at record levels then. Over the course of the next four years, property values could see a correction.

Provincial regulators partner to increase consumer protection and improve mortgage broker standards – Canada Newswire

In an attempt to protect both mortgage consumers and mortgage broker industry standards, provincial mortgage broker regulators have partnered to establish the Mortgage Broker Regulars’ Council of Canada (MBRCC). The partnership gives participating regulators a forum to share concerns and coordinate new ideas, in an attempt to promote harmonization of Canada’s mortgage broker industry. The MBRCC has already released its strategic plan for 2012-2015, outlining priorities such as the development of competency standards and curriculum requirements for mortgage brokers. “It is critical to work more closely together now,” said Kirk Bacon, Chair of the MBRCC. “Mortgage risks are becoming increasingly prevalent, the market is growing more complex and many regulations need to be modernized to keep up.”