The Canada Mortgage and Housing Corporation (CMHC), clearly concerned about Canada’s housing market, warned that it would try to rein in the explosive growth of its insured mortgage portfolio in the coming years. CMHC grew by $170 billion from 2007 to 2010, and according to predictions, it will grow by $30.8 billion between 2011 and 2014, reaching overall levels of $587.7 billion by 2016.
Financial experts call for additional regulation to help ensure that homebuyers are prepared to pay off their loans. The suggestions consist of shortening the maximum amortization period from 30 years to 25 years, raising the minimum downpayment from 5 per cent to 7 per cent, and imposing a means test on potential homebuyers, informed The Canadian Press.
Meanwhile, the Office of the Superintendent of Financial Institutions (OSFI), Canada’s banking regulator, released a draft recommendations that suggests several changes to mortgage underwriting practices and procedures. It is currently open for public comment, but experts are already concerned that if the changes were implemented, it would significantly change the mortgage market.