With an already super inflated housing market and mortgage rates lower than inflation for the first time in over 40 years our favourite Trudeau government is planning on increasing the maximum that can be borrowed on a high ratio mortgage. A High Ratio Mortgage are those where the Buyer puts less than 20% down as a down payment on the purchase price of a new home and these borrowers will see an increase of up to 25% of their maximum mortgage size. Further expansion of credit in an already low inventory market environment is one of the fastest ways to increase prices and was one of the primary drivers of growth during the last US real estate bubble.

High Ratio mortgages were originally designed for low-income households to break into the housing market and shuffled some of the risk onto Canadian taxpayers which made sense as we helped build up our middle class. But that is not what is happening here anymore. Currently High Ratio Mortgages are limited to home prices of less than $1.0M. Canada is planning to increase the maximum that can be borrowed by 25% from $1.0M to $1.25M. In order to take advantage of the $1.25M maximum mortgage a household needs at least $155,000 in income per year. In addition they would need at least $250,000 for the down payment for an uninsured mortgage. At that income level you would only be assisting the top 28% of Canadian households which would not be helping the targeted demographic this plan was originally developed to assist. This advent would fuel a further increase in housing prices in the already over fueled Canadian Housing Market further hurting the populations this plan was originally designed to help.

We suggest again that our governments are out of touch with the realities facing Canadians in the future and are only making things financially worse with poorly thought out planning. If the goal is affordable housing and development of a robust middle class in Canadian society it just doesn’t seem this strategy falls in line with those goals.