TORONTO – Finance Minister Bill Morneau says it’s “impossible to say with absolute clarity” what the impacts of new mortgage rules introduced by Ottawa earlier this month will be.
“What we expect will happen is that as people look towards taking on a mortgage, they will do what most people are already doing and ensure that they take on a mortgage that’s appropriate for their situation,” Morneau told reporters in Toronto Thursday.
“And if it contributes to them looking more carefully at whether the mortgage is the right size for them … that’ll be a positive for their family and a positive for the economy.”
The federal government announced a series of changes aimed at stabilizing the country’s housing markets, including tightening mortgage rules that will put new limits on how much some buyers can borrow.
The new rules mean that as of Oct. 17, all insured mortgages will have to undergo a stress test to make sure borrowers will still be able to make their payments even if interest rates go up in the future.
Previously the stress tests were not required for fixed-rate mortgages longer than five years.
Ottawa also closed a tax loophole so that only Canadian residents can use the principal residence tax exemption. The exemption allows homeowners to avoid capital gains tax when they sell a home as long as they were living in it.
Morneau made his comments following a meeting with private sector economists to discuss their outlooks ahead of the government’s fall economic and fiscal update.
Morneau was tight-lipped about the details of the update, which is expected in the coming weeks. He would not provide a precise date for when it would be released.
TD Economics released a report Thursday that said the budget deficit is likely to come in at about $5 billion higher this fiscal year than predicted in the March budget due to challenging economic conditions.
Over a five-year span, the cumulative deficit could come in at $16.5 billion higher than forecasted, according to the report.