The federal government has no plans to clamp down on the housing market with new, tougher rules for mortgages, the finance minister says. But Finance Minister Jim Flaherty said he's not against the idea if the market changes.
"Our concern is always ensuring that the housing market does not overheat, and in particular that the mortgage market does not overheat," Flaherty said Monday. Concerns have been raised by economists in the last few weeks about the possibility of a housing bubble getting ready to burst and about the level of debt Canadian households are carrying.
The average Canadian household is carrying a debt equal to 146% of their income, a level that has caused Bank of Canada Governor Mark Carney to raise alarm bells. "Canadian household balance sheets are becoming increasingly stretched," Carney said in a speech last week.
Flaherty said the government is concerned about keeping a lid on the speculative real estate market. The Conservatives boosted the requirements to get a government-insured mortgage earlier this year to include that all buyers must qualify for a five-year, fixed rate mortgage, even if they chose a variable rate.
The move came as interest rates sat at historic lows. As for the overall health of the economy, Flaherty said the global economy is in a state of high uncertainty. "The good news is there's less uncertainty today than there was two years ago this month," Flaherty said. He pointed to small growth in the American and European economies, and modest growth in developing countries, as positive signs compared to the collapsing banks that marked the financial meltdown of 2008.
Flaherty also said he had no plans to put off corporate tax cuts planned for the new year saying the cuts, which have already been passed by parliament, would help create jobs.
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