Canada's Oliver says no major shift in mortgage policy for now

Sun Sep 21, 2014 12:34pm EDT
 
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By Jeffrey Hodgson

TORONTO, Sept 21 (Reuters) - Canada's Conservative government has no immediate plans for a shift in mortgage rules, its finance minister said on Sunday, amid speculation policymakers want banks to take more of the risk in mortgage lending.

The federal government provides mortgage insurance through Canada Mortgage and Housing Corp (CMHC) to qualified home buyers who make a down payment of less than 20 percent. Canadian banks rely on this government-backed insurance to reduce the risk on their balance sheets.

"We do over the longer term want to reduce the government involvement in the mortgage market, not eliminate it, but reduce it gradually. We do not have in mind any major moves in this regard," Finance Minister Joe Oliver told reporters on a call following a Group of 20 meeting in Australia.

"Anything that we might consider would be of a marginal nature like some of the steps that have been taken. There have been quite a few of them as you know over the last five years or so to take the froth out of the market."

The Conservatives have tightened eligibility for this type of government-backed mortgage insurance several times, hoping to push more marginal buyers out of the market and cool the housing market boom - fuelled by low borrowing costs - that has followed the financial crisis.

On Friday, CMHC Chief Executive Evan Siddall said the federal housing agency was looking at ideas to improve the housing finance system, including risk-sharing with lenders.

In a Sept. 20 interview, Oliver told Reuters the government was watching the domestic housing market and the high level of consumer indebtedness very closely but did not believe there was a bubble. (Editing by Ruth Pitchford)