Bank of Canada official warns about dangers of ‘tinkering’ with mortgage rules
Global News
The Bank of Canada's Carolyn Rogers says improving housing affordability ultimately requires reaching a balance between supply and demand, which she says will take time.
The Bank of Canada’s senior deputy governor is warning against adjusting mortgage rules to try to make the prospect of homeownership more affordable.
Carolyn Rogers delivered a speech Wednesday on the mortgage market to the Economic Club of Canada in Toronto.
“We need to resist the temptation to try to solve the housing affordability challenge by tinkering too much with the mortgage market,” Rogers said in her prepared remarks.
The central bank official says improving housing affordability ultimately requires reaching a balance between supply and demand, which she says will take time.
“In the meantime, leaning too much on measures that reduce the short-term cost of financing could have long-term impacts to the financial health of households, the market and the economy,” Rogers said.
The federal government recently announced it will increase the maximum amortization period for first-time homebuyers and buyers of new builds from 25 years to 30 years to help more people enter the housing market.
Rogers says that while taking out a 30-year mortgage reduces monthly payments on the average mortgage by about $200, it increases borrowers’ overall interest costs by $50,000 over the duration of the loan.
The Liberal government’s decision to increase the amortization period was in response to concerns that young people aren’t able to enter the housing market because of how high home prices are now.
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