He noted that the U.S. financial crisis was spawned by risky mortgages.Risky mortgages, hey Jim? Let's look then at the wondrous steps Mr. Flaherty is referring to today as he assures us they wanted to keep the housing market solid. Well, back in 2006, there was this adventure:
"You know 40 per cent of the people in the United States with sub-prime mortgages were sold this product in their own homes," Flaherty added.
"This is something fortunately that did not happen in Canada. We've taken some steps this year to make sure our housing market remains solid."
In 2006, the maximum amortization period was extended to 40 years from 25, and longer-term mortgage products have become increasingly popular with buyers looking for lower monthly payments as the price of Canadian homes soared."The government introduced the 40-year period in 2006 as a "financial innovation" to encourage more home buying." Then this summer there was the big backtracking away from the 40 year mortgages:
The federal government announced late yesterday that it was revamping the rules on government-backed mortgages. The key changes include a severe clampdown on the use of 40-year amortizations, which are proving increasingly popular with Canadians. Longer-term rates of up to 35 years will still be allowed.
Finance Minister Jim Flaherty is among those who have been sounding alarm bells in recent months about the dangers of 40-year mortgages, saying the country's long-term financial health "requires having a nation of savers."Yes, he was rightly worried. He was in charge, after all. Yet why did he bring in the longer amortization periods in the first place? Just more of that strong economic leadership these fellas claim to dispense.
He recently told a Toronto audience that he is worried about the growing tendency of Canadians "to go to longer amortization periods and smaller down payments." (emphasis added)
Speaking of which, here's that fantastic video done by the folks at Creative Revolution: