Ottawa considers measures to cool off housing market
The days of taking of buying a house with next to no money down and spending the vast majority of one’s adult life paying it off may be coming to an end. Finance Minister Jim Flaherty is cracking down on Canadians that pile up debt when interest rates are low, only to find themselves in deep financial trouble when the rates rise again. Part of his strategy could include raising the minimum down payment on homes from its current level of 5 percent and scrapping 35-year mortgages altogether. Flaherty believes the measures would prevent people from accumulating more debt than they can handle. But some in the banking world are leery. “You could basically shut down 25 per cent of the market,” lamented CIBC economist Benjamin Tal. “It’s going to be significant because we’re talking about a lot of money that took advantage of those [low] rates.”