To The Pointwith Boris Bozic
Commentary, Opinions, Thoughts and Discussion on Current Events, Politics and The Mortgage Industry

3 Comments Mortgage Industry: How Refreshing

Article written by Boris Bozic on the 27 Mar 2012 in Mortgage

Straight talk from a politician is rare and yet when we hear it we still look for the underlying message.  We are conditioned to look for what wasn’t said.  I have a great deal of respect for Minister Flaherty, and his willingness to speak in clear terms.  That’s not easy for a politician to do because it opens them up to criticism and it gives them little wiggle room if they want to back track.  You may not agree with what Flaherty has to say but at least you know where he stands on issues.  Minister Flaherty gave a speech in Stittsville, Ontario last week, and it was another example of straight talk.

His speech was about the state of the Ontario economy, and his thoughts regarding the pressure being put on the federal government to further tighten mortgage rules.  There was no ambiguity in his speech, here’s what you may have missed in his speech:

“I find it a bit odd that some of the bank executives are taking the position that the minister of finance or the federal government somehow should tell them how to run their business.  We have bank executives in Canada going and saying ‘really, the rules on insured mortgages should be tightened up.’  They must forget that they are actually the ones that issue mortgages.  It’s their market.  It’s not my market.  They decide what they want to charge in interest rates.  They’re the ones that make the profits out of this business, so I find it a bit much when some of the bank executives turn to the government and say ‘you ought to change the rules and make it tighter.’  It’s very interesting commentary from them.”

Try as I might but I can’t find a hidden message in the statement above.  No Clinton like speak here.  The message is clear and what else is clear is that some bank executives got a verbal public spanking.  For months now the pressure has been relentless that the government must act and tighten mortgage rules.  The fact that some of those that are sounding alarm bells have introduced or decided to follow the irrational interest rate pricing game is “special”.  Let’s see, “we’re concerned about consumer debt so we’ve decided to lower rates so consumers can take on more debt, and add gasoline to an already hot housing market.”  Alex, I’ll take double speak for $200 please.

I understand and agree that the concern about consumer debt is real, and it needs to be addressed.  The Bank of Canada, and the Ministry of Finance, are walking a tightrope.  Cooling down the housing market, while not negatively impacting the overall economy, is not an easy task.  Recently CAAMP provided a report to the Ministry of Finance about the impact of the housing industry has on employment in Canada.  The report was written by Will Dunning, CAAMP’s Chief Economist.  I encourage you all to read the report, and to receive a copy please visit CAAMP’s website at

Here’s a few highlights from the executive summary:

  • The housing and mortgage industry has been particularly important to job creation these past 5 years.  From 2006 to 2011, it’s estimated that 18% of all job creation occurred as a direct and indirect result of growth in the housing and mortgage sector.
  • The biggest threat to the health of the Canadian housing and mortgage industry is a recession that results in job losses.  The best way to support the housing and mortgage industry and to sustain its positive impact is to pursue policies that continue to create jobs.  At the same time it is important that qualified buyers have choice when seeking mortgages to finance or re-finance their home.

As an industry we have a responsibility to the government to provide facts, which ultimately can assist the government with a safety net.  Is our message getting through?  All I know is that the government decided to not change the mortgage rules at this time.  I would like to believe that our efforts to date have had a positive impact.  One thing I am certain of is that we have to stay the course, and not talk through both sides of our mouth.

Until next time,



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Hi Boris
Your point is well taken. What sets politicians apart from bankers is that politicians seldom speak in clear terms and bankers invariably speak out of both corners of their mouth.

Thanks for freezing the moment in time when we see bankers at their best of their shell game.

Gord Dahlen @Twitter ID Website Reply

Boris you are spot on ,now only if we could have you published on a daily basis in the Globe and other such”sky is falling” rhetoric vehicles, we could gain momentum with refreshing straight talk that will help sustain our industry.

Hello Boris

Good blog post!

I think underlying message in his speech is that he has forgotten what an oligopoly is; the mortgage market is an oligopoly.

We have all the same products with different names and basically the same. There is the “no frills” brand that is a bit cheaper but really the same. There are some small differences but I don’t think any of them make a consumer smile. Most clients don’t remember the name of the mortgage firm their mortgage is with.

The banks would like to see it harder to get a mortgage and have big brother tell them all that this is the new rules. Mortgages being a oligopoly the banks need this to happen because there isn’t a solution that works for them without losing market share. I am shocked that Flaherty didn’t see that Banks need him to set the rules on the playground and help make sure people play by the rules.

The tricky part to this whole problem is the house hold debt component to the problem that is attached to the strength of the housing market? I do not think that restricting the access to the equity is the solution and I feel that solution was rush by a government that is disconnected with the majority of Canadians.

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