Repeated efforts by policymakers to take the heat out of housing have not had a noticeable effect. So on June 21st Jim Flaherty, the finance minister, had another go, his fourth in four years. Some of the new measures were cosmetic. Buyers of homes worth more than $1m have been able to get mortgage-default insurance from CMHC with a downpayment of only 5%. In practice, it is hard to find buyers in this bracket who do not have lots of equity in their homes. But after July 9th mortgages for homes of this value will not be eligible for CMHC coverage.
Other measures have more teeth. The maximum amortisation period for a mortgage will now be 25 years, down from 30. That should hurt demand: last year about 40% of new mortgages were for terms longer than that. Refinancing a home will be allowed only up to 80% of its value, down from 85%. Homebuyers will have to demonstrate their housing costs are no more than 39% of their gross household income. On top of Mr Flaherty's measures, the Office of the Superintendent of Financial Institutions, Canada's banking regulator, slapped a loan-to-value limit of 65% on borrowing against home equity.
Craig Alexander, the chief economist for TD Financial Group, estimates all this will be the equivalent of about a 1% rise in mortgage rates for most homebuyers. He believes that will produce a slow unwinding of the housing market. If he is right, and Mr Flaherty's various interventions avoid the collateral damage that would be caused by an actual interest-rate rise, Canada's admirers will have another thing to swoon over.
