Brokers, realtors, homeowners, and those looking to get into the housing market can breathe a little sigh of relief. Minister of Finance, Jim Flaherty, said in a meeting on Wednesday that he doesn’t foresee having to intervene with more mortgage regulations to curb our hot real estate market.

Flaherty stated that only if they foresee a bubble in our housing market will they step in to try and control the situation. If they happen to see dramatic increases in home prices across the country only then will it deserve attention from Flaherty and company. I guess he read my article from a couple of weeks back.

According to the Teranet – National Bank home price index, home prices increased 1.3% in July, which is a gain of 5.4% year-over-year, which is in the ballpark for annual averages. However, Royal Lepage did note in its quarterly housing survey that prices in Vancouver shot up 17% on the year, three times the national average. But this is an outlier, mainly due to foreign investors purchasing properties in the Vancouver area.

But in a recent report from the International Monetary Fund, they believe that our Government doesn’t really have control over our finances. Basically, they said that our current housing market requires more vigilance and that we may need to introduce some tougher measures (i.e. more mortgage restrictions) to curb a further buildup of debt.

They feel that Canadians are too far in debt, and as long as house prices are on the rise we’re ok. But if we see a dip in the value of our real estate it will put a damper on households’ willingness and ability to spend.
Again, it all comes down to the balancing act by Flaherty and it’s certainly not an enviable position to be in.

But looking back to last week’s article about the OFSI stepping in to closely monitor banking activity regarding home loans and lines of credit, this should further help banks keep their noses clean and ensure that only the highest quality of borrowers get the appropriate product, rather than turning a blind eye to some criteria in order to bolster lagging numbers.
Even though we have super low rates, spending is unable to continue to climb at this pace. Most people who were planning to do what they had to do (purchase, refinance) have probably already done it since rates have been historically low, driven by the fear of a ‘now or never’ mentality before rates increase. At least low rates going forward will keep the market steady and help keep prices stable. That’s not to say nothing will happen. Everyone thought rates would increase before this as well, but it’s lasted a lot longer than many thought.

For those who have a variable mortgage this is something to think about. A recent rate forecast by BMO figures that the earliest we may see a rate increase may be the first part of 2013, held back by a very weak global economy. This isn’t going to fix itself overnight, so don’t jump the gun on locking in just yet.