Although most are afraid that the CMHC’s mortgage insurance premium hike will make purchasing harder for potential homeowners, a professional analyst deliberated that the decision of CMHC is an important step in dealing with the issue of the affordability of houses in the real estate markets for consumers. Rob Carrick, real estate observer said the hike by the real estate industry was done as a means to have first-time buyers pandered.
Carrick penned; “Expect this increase to be added to the grievance list of people who work in the real estate-industrial complex – agents and mortgage brokers, plus others who make a living from home sales. They are working hard to portray first-time buyers as martyrs to government policies designed to cool down the housing market.” Additional to that he said; “But these measures are not just necessary – they may also help to make houses more affordable by containing price increases or causing them to fall. CMHC is increasing premiums to boost funds available in case there’s an economic shock of some sort and mortgage defaults soar. High house prices increase this risk because people must stretch their finances to get into the market and then afford the full array of costs as a homeowner.”
The provincial governments are not an exemption to ill-advised reactions. Carrick elucidated by saying; “Ontario is offering a limited break on land-transfer tax, while the B.C. government is offering loans to first-time buyers to help them put together a down payment on homes costing up to $750,000. Measures like these incrementally support more home buying, which in turns pushes prices higher. Worse, we end up helping people get into the market while ignoring the much more important question of how they’ll be able to afford their mortgage over the long term.”
He concluded by saying its best to have the government work towards fixing the issue of long-term housing affordability. He said; “The wrong approach is to offer cosmetic, politically expedient help to young buyers that fail to address the reality that it’s way more of a burden to own a house than it is to buy one.”