Prime Minister Justin Trudeau is defending his government’s stricter mortgage eligibility rules, saying they’re protecting homebuyers from overextending themselves financially.
Trudeau was asked about the changes after the country’s central bank indicated earlier this week that rising interest rates and government measures are having a larger-than-expected impact on the housing market. The Prime Minister said his government is working to make housing of all categories more affordable, but there’s a risk.
"The flip side of it also is, as we saw from some of the challenges in the United States around the last recession, people can overextend in buying their housing," he said Thursday at an event in Saskatchewan. "So we made some modest changes to mortgage rules that are making sure that people are not getting more vulnerable than they have to, by not being able to afford the houses that they’re looking for."
The new rules around who qualifies for a home mortgage spurred a slowdown in sales and prices in markets across Canada that had been overheating, notably Toronto and Vancouver. Sales in the Toronto region fell 16% to 77,426 transactions in 2018 while the average price fell 4.3% to $787,300, the Toronto Real Estate Board (TREB) reported last Friday. That’s the worst year for sales in Canada’s largest city since the global recession of 2008. In Vancouver, full-year sales fell 32% to 24,619, the lowest since 2000 and 25% below the 10-year average.
However, many of the mortgage rule changes apply nationally, raising the bar for home ownership everywhere, including in energy-producing regions that are currently struggling with lower oil prices, such as Saskatchewan and neighbouring Alberta.
Trudeau acknowledged concerns from the real estate industry that "maybe we’re making it too hard to buy a new house, and that’s something that we are very alert to.” Still, he gave no indication that Ottawa is contemplating a reversal anytime soon.
"We’re looking and collecting data, but I think we can all agree that we need to make sure Canadians don’t get saddled in mountains of debt if there is a recession or there is a housing collapse. We need to make sure that we are ensuring that people can afford their homes," he told reporters.
