Canada’s Finance Minister influences the mortgage market more than any other politician, and now we’re getting a new one.
Finance Minister Bill Morneau, who’s held that role since November 4, 2015, is out. He resigned today.
To say Morneau was pro-mortgage tightening is an understatement. The 57-year-old Liberal cabinet minister presided over numerous impactful changes to Canada’s mortgage market, including:
- A new mortgage stress test on all insured mortgages
- A new mortgage stress test on all uninsured mortgages at federally regulated lenders
- Increasing the minimum down payment to 5% on the first $500,000 and 10% on the next $500,000
- Eliminating default insurance for refinances, homes over $1 million, 30-year amortizations and single-family rental properties
- Fee increases on mortgage securitization, which got passed on to consumers
- Increases in capital requirements for banks and default insurers, which got passed on to consumers by way of higher insurance premiums
- A higher RRSP Home Buyers’ Plan limit ($35,000 instead of $25,000)
- The First Time Home Buyer Incentive
- Temporary COVID-19 mortgage liquidity measures.
Some of these changes, like the uninsured stress test and capital requirement increases, were initiatives from federal agencies under his watch. Some he had direct purview over.
It’s obvious why Morneau resigned unless you haven’t been watching the news for the past few weeks. It’s known in politics as being “thrown under the bus.”— David Rosenberg (@EconguyRosie) August 18, 2020
To his credit, in his final days, Morneau reportedly tried to fight for some degree of restraint on the government’s runaway COVID-related spending and $343 billion deficit. That may have caused part of his rift with the Prime Minister, say pundits.
There’s no word yet on who Trudeau will replace Morneau with. According to CBC, names bandied about include Chrystia Freeland, Jean-Yves Duclos, François-Philippe Champagne and even former Bank of Canada governor Mark Carney.
In terms of mortgage policy, we might not see much action for a while until a new Finance Minister settles in.