Monday, January 17, 2011

Better late than never...

The announcement from Flaherty on home mortgages:

  • Mortgage amortization periods will be reduced from 35 years to 30 years.
  • The maximum amount Canadians can borrow to refinance their mortgages will be lowered from 90 per cent to 85 per cent of the value of their homes.
  • The government will withdraw its insurance backing on lines of credit secured on homes, such as home equity lines of credit

You have to wonder why in God's name the government (ie us suckers) even got into insuring HELOCs (number 3)

These will not take effect until March 18th so bank loan officers can squeeze a few more people over the line.

BTW the last changes in lowered max amortization from 40 to 35 and max refinance to 90 from 95%. It really didn't have much of an effect on housing prices, so I don't have much hope for this either. Now shuttering the CMHC or taxing 'empty homes' would have a bigger effect, but I wont hold out hope for that.

Anyway it is a start- but of course it is always better NOT to start a fire than to try and put it out. Remember that for next time Mr F.


  1. oops - it is good but not good enough to post four times :)

  2. Hmmm... tepid changes. Without whacking higher interest rates it's no news, just snooze, while the remaining crackheads buy up the available inventory (which will be low, I predict). Local sellers have been trained by Pavlov to pull their housing from the market when prices aren't soaring.

    I don't worship Reagan either. Both sides are foolish. FWIW.

  3. The big banks pretty much said that the B of C doesn't need to raise rates anymore and Carney obliged. I have NO doubt that Flaherty and Carney spoke before this decision and Flaherty probably said what do I have to do to stop you from whining about debt and raising rates.

  4. It is widely understood that markets can experience extended periods of irrational speculation and valuation bubbles. This becomes problematic when people begin to rely on the irrationality of others as a justification for continuing to speculate, because at that point, they require the assistance of increasingly "greater fools" in order to sustain the advance. Keynes was quite right in the sense that one should never maintain a leveraged position against the market, because leveraged losses certainly do threaten solvency. But investors are not forced to accept risk just because other investors are speculating - there is no great risk in positions that accept no great risk. Moreover, investors cannot safely ignore valuations, because once valuations become rich, the returns from continuing to speculate are not easily retained even if they emerge for a while.

    Written by John Hussman on why he isn't chasing the stock bubble

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