UPDATE 1-Canada finance minister sets announcement, housing possible topic

Thu Dec 10, 2015 8:16pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

(Recasts, adds possible steps to cool housing market)

By Randall Palmer and David Ljunggren

OTTAWA Dec 10 (Reuters) - Canadian Finance Minister Bill Morneau has scheduled an announcement for Friday morning, and while no topic was given, the government is facing a key decision on how to cool a heated housing market.

Canadian household debt as a percentage of income is at an all-time high, in large part because of big mortgages taken on as housing prices rise, particularly in the major cities of Vancouver and Toronto.

Canada avoided the housing crash of 2007 that hit the United States and triggered the global financial crisis. But a post-recession housing boom, fueled by record-low borrowing costs, has prompted some analysts to warn a bubble may be in the works.

Finance Department officials have for two or three years been recommending some form of action to try to prevent financial trouble, one industry source said.

The Conservatives, who lost power to the Liberals in the Oct. 19 election, had been contemplating action if they won, the source said.

A second well-placed source said a lead option being considered was to increase the percentage down payment required for insured mortgages over a certain dollar amount, beyond the current 5 percent.

Such a tiered system, with a greater percentage required the larger the mortgage, has the advantage of trying to target the hotter markets without shaking areas where prices are much lower.   Continued...