Since 2008 Finance MinisterJim Flaherty has dealt the mortgage business plenty of pain for promised long-term gain. So when news broke Tuesday that he quit, a wave of relief spread throughout the industry.
That relief was quickly replaced by concern about what his replacement Joe Oliver might have planned. (Our guess: probably not too much at this point.)
Speculation aside, this week’s Globe column reviews some of Flaherty’s impact on Canada’s mortgage landscape.
Virtually every housing-related professional has an opinion on Flaherty’s policies. Most who we heard from (who weren’t worried about being politically correct) had a tone not unlike this:
“Personally I say good riddance to Flaherty. He had a full understanding of how CMHC earned its income,” Geoff Willis of Origin Home Financial Partners told us. “[He] used his influence to create consumer concerns because of the government’s concern about backstopping…mortgages…”
One political analyst that we saw comment suggested that new mortgage policies, if any, would probably come from the Prime Minister’s office, given the election next year. Moreover, Minister Oliver would need time to get up to speed, so near-term changes are unlikely.
Jim Murphy, President and CEO of the Canadian Association of Accredited Mortgage Professionals, says, “CAAMP will be communicating our positions and concerns directly to the new Minister.”
“We do not expect any immediate changes. OSFI B21 is still the policy to watch, which we will.”
More: Seven ways Jim Flaherty changed the Canadian mortgage market
Flaherty’s impact on the mortgage industry was disastrous, had little or no impact on house prices and was apparently driven by ideology rather than any actual evidence of a need for rule changes. The Harper government clings to power by scaring the @#!^ out of Canadians on a series of issues including debt, crime and immigrants. We may have a debt problem in Canada but it is consumer debt and not mortgage debt. Sadly the mortgage industry got the black eye anyway.
Joe Oliver looks like someone that will do whatever his employer tells him to do with no objection :)
I think Mr Flaherty took on a air of something a bit grander than he actually is. For all that hapened in the past 6 years, if they he had not done anything to begin with, we would have been just as well off.
I posit that the recent internationally acclaimed wins chalked up on the Canadian financial file, have been largely the result of the very venerable Mark Carney this past half-decade, rather that Mr. Flaherty, over his spotty 8-year tenure.
Overall, the file has been managed masterfully.
Thus far.
It’s just like the joke about the American and Canadian crab fishermen. The American had a tight lid on his holding tank as he brought his catch to market; he noticed the Canadian fisherman had no lid at all. “why no lid” asked the American “no need” said the Canadian “they are Canadian crabs, as soon as one get close to the top of the tank the others grab him and pull him back down”
We have been so fortunate since 2008 in avoiding the economic suffering other countries have experienced and yet we act as if the man in charge of the file had nothing to do with it. Even those who realize we have been very fortunate give the credit to Carney.
In Canada no matter what good you do; you can be sure others will try to pull you down.
I agree with Mr. Butler. He has done a good job, should be given some of the credit for how fortunate we have been with our economy.
Mortgage debt is more dangerous since rates are up for renewal every 5 years or so and usually larger than credit card or personal loan debt. Credit card debt interest is already high for most people at ~20%, so it won’t change too much if interests rates go up, but 2% interest raise on mortgages will have major effects on most people who have over $200,000 mortgages. I am not saying that it would bankrupt everyone, but an extra ~$400/month on debt will make people cut somewhere else.
Now, because of the reasons expressed above, I don’t think interests rates will move too much over the next few years.
What did Flaherty do to help the economy?
I don’t think he did anything that any other finance minister wouldn’t have done.
This type of move in chess is called “Sacrifice the Queen”