Canada Cools Its Housing Market—But Frustrates Home Buyers

Tougher rules for new borrowers, rising mortgage rates and new taxes for home buyers have been put in place by Canadian regulators in recent years to tame some of the most overheated housing markets in the developed world. But they have also shut prospective homeowners out of the market, the Wall Street Journal reported. That has slowed sales in cities like Toronto and Vancouver in recent months, prompting some to call for Canada to loosen the restrictions lest they brake the economy too much. Evan Siddall, a former Goldman Sachs banker who now runs Canada’s housing agency, is unmoved. In fact, he doesn’t think the tougher rules go far enough. “Residential real estate has become too large a part of our economy, and it’s diverting investment,” he said in an interview. “You can’t build a country on making houses for the country.” Siddall, chief executive of Canada Mortgage & Housing Corporation, has publicly backed a slate of tougher mortgage rules in recent years, including a requirement for home buyers to prove they can handle interest rates that are either 2 percentage points higher than the mortgage rate offered by their bank, or at the five-year benchmark rate set by the Bank of Canada, whichever is higher. Originally meant for borrowers needing mortgage insurance, the test has since been expanded to any prospective buyer. Read more.(Subscription required.)