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Conservative Government Waging War on Oakville Real Estate

Photo credit: 401(K) 2013 / Foter.com / CC BY-SA Photo credit: 401(K) 2013 / Foter.com / CC BY-SA

Photo credit: 401(K) 2013 / Foter.com / CC BY-SA

It appears that the Conservative Party of Canada is very pleased about the progress it has made in deflating the housing market in Canada according to Jim Flaherty - Finance Minister's comments on December 3, 2013 - Globe & Mail

"Finance Minister Jim Flaherty is not worried about a housing collapse, saying he is happy he has helped cool the market with the latest round of stricter mortgage rules."  – Canadian Press

On January 14, 2013,  Jim Flaherty on home sales dive: ‘I don’t mind prices coming down a bit, too’ – Globe & Mail. However, do the rest of Canadians mind if their home price come down? For the majority of Canadian home owners it is their largest asset.

Finally in response to BMO cutting its 5 year fixed rate from 3.09% to 2.99% on March 4, 2013, Mr Flaherty said:

220px-Jim_Flaherty_2007“As for decisions by individual banks, as I have said repeatedly before, my expectation is the banks will engage in prudent lending — not the type of race to the bottom practices that led to the mortgage crisis in the United States,” - Globe & Mail.

“As for decisions by individual banks, as I have said repeatedly before, my expectation is the banks will engage in prudent lending — not the type of race to the bottom practices that led to the mortgage crisis in the United States,” - Globe & Mail.

With mortgage amortization times being shortened far fewer mortgages are being issued - resulting in  banks to competing for a smaller group of eligible buyers. The only competitive element banks have at their disposal is to lower lending rates to entice those buyers. This is basic economics.

This decision to slow the housing market down by the Harper government started back in 2008 when the mortgage amortization period dropped from 40 years to 35 years. In 2011 it dropped again from 35 years to 30 years, and then in June of 2012 it contracted again from 30 years to 25 years. Initially - the reduction from 40 years to 30 years did seem more than reasonable. There was no point in issuing mortgages which would extend past the working life of most Canadians. Though for most Canadians - the concept of  retiring is a distant dream. Fewer and fewer Canadians work for companies that have pensions, and even fewer have any retirement savings. Even in Oakville - Canada's most affluent community, the number of residents with retirement savings is extremely low.

So why has the Federal government decided to wage war on residential real estate? The answer Oakville residents are given is to reduce family debt - since the expectation of interest rates rising could put a large number of Canadian in default. It appears there is concern about the welfare of the Canadian people.

Just to add to the fire on Monday, the analysis firm Fitch Ratings said Canada’s housing market is overvalued by about 20 per cent across Canada – Fitch is owned by ultra conservative Hearst Corporation and M. Lacharriere, a resident of France  and a right-wing cultural philanthropist. Did Finance Minister Flaherty get more than he bargained for?

So what are home owners to do when dealing with a federal government bent on deflating housing prices. A suggestion might be to give Oakville Conservative MP Terence Young a call to voice your opinion at 905-338-2008.