Minister of Finance, Joe Oliver, is exercising his power by taking a hands-off approach to the low rates in the mortgage market. This laissez-faire approach is a contrast to that of his predecessor, Hon. Joe Flaherty, who made news when he publicly scolded lenders for advertising mortgage rates below 3 percent in an already hot Canadian mortgage and real estate market during 2013.
According to Oliver, “I have not spoken to the banks about what their rate policies should be. I don’t feel that is appropriate or necessary at this point.
Joe Oliver affirmed his belief that his role in today’s market is to remove the federal government’s involvement in the Canadian mortgage market, allowing private lending institutions and banks to dictate their own mortgage products and rate policies.
The response from the Minister of Finance comes days after a report was released from the Canadian Real Estate Association which attributed a 7 percent increase in the price of homes year over year for the month of May. Canada’s largest banks continue to post gargantuan profits and look to compete on interest rates in order to spur consumer demand for homes and mortgages.
Economists continue to forecast a soft landing for the housing market through to 2015. The Bank of Canada has also recently reaffirmed its stance on the Overnight Lending rate; however, rule changes from the Federal housing agency, CMHC, have introduced tougher lending requirements for borrowers as well as tighter insurance allotments for lenders.
Five year fixed rate mortgages under 3 percent continue to be present in the market. Mortgage brokers and banks alike continue to advertise fixed mortgages under 3 percent for clients who qualify.
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