Canada plans no new steps to cool housing market: finance minister

Wed Aug 1, 2012 8:04pm EDT
 
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By Edwin Chan

SUNNYVALE, California (Reuters) - Canada does not expect to have to tighten mortgage rules further as the real estate market has softened in the wake of government measures to cool it down, Finance Minister Jim Flaherty said in an interview on Wednesday.

Home prices hit a third straight record high in June, extending a steady climb that had triggered fears of a property bubble. But a slowdown in the pace of price increases suggested to economists the red-hot housing market is cooling.

"We always monitor the housing market. There has been concern, particularly with the condo market in Toronto and Vancouver. We have taken steps, including recently in June, another step to tighten the market for residential mortgages," Flaherty said in an interview in Sunnyvale, California.

"There has been some softening in the past month or so, so right now there is no intention to intervene again," he said after a series of meeting with Silicon Valley tech corporations and venture capitalists.

The minister tightened conditions for borrowers and lenders on June 21 to put the brakes on home buying and deflate a possible housing bubble before it popped.

Canada does not have the subprime market that helped doom the United States to mortgage defaults and foreclosures, nor do lenders typically repackage and resell mortgages the way U.S. lenders did before the U.S. housing bust in 2009.

But Flaherty and Bank of Canada Governor Mark Carney have expressed concern about rising household debt and about persistent strength in the condominium market.

Ratings agency Standard & Poor's has warned that debt-ridden consumers and the cooling property market are leaving the country's banks vulnerable, revising its outlook to "negative" from "stable" for the country's biggest banks.   Continued...

 
A local resident watches a house being moved along a street in Vancouver, British Columbia July 26, 2012. REUTERS/Andy Clark