Canada strives to stabilize housing market

Canadian Finance Minister Bill Morneau on Friday announced a tightening of mortgage rules to curb overspending on homes to contain risks in the housing market.

Morneau said starting Feb. 15, 2016, the minimum down payment for government-backed mortgages will go up from 5 percent to 10 percent for homes priced more than 500,000 Canadian dollars (about 364,034 U.S. dollars) to tackle potential future vulnerabilities in the country's housing sector.

Federally regulated lenders are required to obtain mortgage insurance when the down payment is less than 20 percent of the purchase price of a property while properties valued at 1 million Canadian dollars and above require a minimum down payment of 20 percent.

The new regulations aim to protect the economy from potential excess housing market volatility, said the Morneau.

The average price of homes sold in October 2015 through the Canadian Real Estate Association's Multiple Listing Service system was about 453,000 Canadian dollars, up 8 percent year on year, which was supported by low lending rates.

Morneau also highlighted the increases in guarantee fees for Canada Mortgage and Housing Corporation (CMHC)-sponsored securitization programs released by CMHC early Friday.

"The Government's role in housing is to set and maintain a framework that is equitable, stable and sustainable. The actions taken today prudently address emerging vulnerabilities in certain housing markets, while not overburdening other regions. They also rebalance government support for the housing sector to promote long-term stability and balanced economic growth," said the minister. Endit