Mortgage Broker News:
RBC is among the first to suggest the government might want to make those new rules temporary and not permanent, arguing they – coupled with rising interest rates – could scuttle the market.
“It’s hard to argue that they shouldn’t be doing something to slow this down,” David McKay, head of RBC’s domestic banking told reporters over the weekend. “But what is the longer term implication of all this in a higher rate environment? And do we pull back too tightly on the reins?”
Moreover, McKay is suggesting the government should consider making those new rules – amortization capped at 25 years for insured mortgages and LTV at 80 per cent – a short-term intervention. They could, in fact, damage to the economy in the long run if kept in place beyond that, he said.
“This is not like turning a Ferrari,” the RBC exec said. “This is like a big ship. And it takes a while to turn.
And sometimes if you over steer, you can’t re-steer the other way.”
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