Bits & Bites by Peter Simpson
Bits & Bites by Peter Simpson for METRO
Federal Finance Minister Jim Flaherty recently announced rule changes for federally insured residential mortgages, including reducing the maximum mortgage period to 25 years from 30 years.
Although Flaherty says his move will reduce the interest payments families make on their mortgages, helping them build equity in their homes more quickly and pay off their mortgages sooner, fewer buyers will qualify for mortgages, particularly in high-priced housing markets such as Vancouver.
Ron Olson, the president of the Ottawa-based Canadian Home Builders’ Association, said the shorter amortization period will reduce housing demand by eroding affordability.
“For those who would otherwise have selected a 30-year amortization, it will take additional income each month to service new mortgage debt. Some potential new homebuyers will no longer qualify, and this will disproportionately affect younger first-time homebuyers,” Olson said.
“The minister said he would pay close attention to the results of his policy. He must be prepared to take action should the results be more dramatic or negative than anticipated, and he should reconsider the new mortgage rules if evidence shows they result in market instability,” Olson said.
Olson said if Flaherty wants stability in housing markets, and that housing affordability is the key to that objective, the federal government must take immediate action to work with other levels of government to reduce government- imposed costs on new homes, including adjustments to federal GST thresholds for the New Home Buyer Rebate. “That would have the same effect as shorter amortization rates, as it would also help Canadians build equity in their homes,” Olson said.
Trio of economic predictions
Housing economist Peter Andersen recently made three predictions worth watching: 210,000 national housing starts this year; national economic power will shift to Western Canada; and Canada has economic momentum but will experience slow growth (two per cent) in 2013 and
Underground cash economy
When it comes to dodging taxes and participating in the underground cash economy, Canadians are neophytes compared to Greeks. According to the Reuters news agency, annual tax evasion in Greece is estimated at $55 billion, one-fifth of its $270-billion economy. I hope a recovery is in the cards.
Britco a B.C. success story
Rick McClymont and David Taft, who recently sold Britco Structures, just celebrated their 35th year as partners. Both were presented with commemorative art from Coast Salish artist Jody Broomfield. Britco, which again built the spectacular PNE Prize Home, is a true B.C. business
Habitat high on builder list
Builder magazine recently published its America’s Largest Builders 2011 list. Interestingly, Habitat for Humanity International, with 4,970 closings and $1.6 billion in gross revenue, is listed as the sixth largest builder.