Real estate sales are good for the economy, but what happens when prices get too high for young family incomes and borrowing costs increase?
Perhaps it’s time for the Government to step in?
Finance Minister Bill Morneau said earlier this week Ottawa is exploring measures to make home ownership affordable for more millennials, a generation made up of people who are now in their mid-20s to late-30s.
Morneau didn’t elaborate on what options he’s considering, but Canadians could learn more in the coming weeks when he releases an election-year budget that will also lay out Liberal platform commitments.
Major political parties have already started positioning themselves on the complex area of housing affordability. It will likely emerge as an important campaign issue ahead of October’s federal election, and the challenges of millennials and first-time buyers could attract a lot of attention.
Some lenders have ideas for some helpful changes:
“There’s a lot of folks that just don’t qualify to purchase anymore at the bottom end of that ladder,” said Paul Taylor, president and CEO of Mortgage Professionals Canada.
Taylor said the stress tests have succeeded in taking some of the froth out of the market and he believes the time has come for Ottawa to loosen them. In recent meetings with federal officials, he said he has recommended the reintroduction of insurance on 30-year amortization mortgages as a targeted way to help people at the lower end.
The coming weeks would be a good time for some changes with the busy spring season is approaching, he said.
“If we have another cool spring market, that’s going to have serious knock-on effects to the economy,” said Taylor, who was encouraged by Morneau’s comments.
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