The federal government has announced several measures designed to protect the long-term stability of Canada’s housing market by boosting sources of funding to lenders and making mortgage insurance fair and more transparent.

On the funding side, the Canada Mortgage and Housing Corp. recently announced the Canada Mortgage Bond program will be expanded, and the federal government is also proposing changes to clarify the tax treatment of existing innovative capital structures used by Canadian financial institutions to raise funds.
“Changes announced today [Friday] will make Canadian regulations more consistent with rules in other jurisdictions that operate under the guidance of the Basel Committee on Banking Supervision,” it notes.

Additionally, the government says it intends to introduce two new consumer measures concerning mortgage insurance. First, it will enhance disclosure to consumers about the characteristics of mortgage insurance by setting out additional, mandated disclosures to help consumers better understand the mortgage insurance transaction. The second measure will ensure that Canadian consumers are charged no more for an insured mortgage than the true cost of obtaining that mortgage by guarding against practices that artificially inflate insurance premiums charged to borrowers.

“These measures, and the limits recently announced for government guaranteed mortgages, will protect the Canadian housing market from a U.S.-style housing bubble and encourage individuals and families to save through home ownership,” it says.