Canada bubble fears unfounded - mortgage industry

Mortgage Professionals Canada, a national industry group representing over 11,000 mortgage professionals, recently stated that the fears of a housing bubble in Canada are not based on any compelling evidence.
 
The group added that any changes by the federal government to the existing lending environment would only serve to inflame the markets and possibly lead to a crash.
 
“There is a risk that changes in policies of lenders or mortgage insurers that reduce access to mortgages could cause an unnecessary drop in housing demand and housing prices, and bring consequent economic damage,” Mortgage Professionals Canada chief economist Will Dunning told Garry Marr of the Financial Post.
 
“Given the importance of housing activity to the national economy (especially since investment in energy projects is no longer a driver of growth), we are hopeful that any changes will be based on a careful consideration of the tradeoff between caution in the mortgage market versus overall economic growth,” Dunning added.
 
The economist noted that despite 8 years of fear-mongering, the scenarios outlined by the most pessimistic market observers have not transpired.
 
“Those comments have generally assumed that rapid growth in house prices (or a rising ratio of house prices versus incomes or of house prices versus rents) is sufficient evidence of a bubble. To the contrary, these supposedly strong indicators are not definitive proof. They may actually represent healthy outcomes within existing conditions,” Dunning said.
 
Mortgage Professionals Canada said that a bubble exists only when “excessive activity” is stimulated by undue expectations, and when prices end up far exceeding expected levels considering the provinces’ economic fundamentals.
 
Dunning maintained that these indicators do not exist at the moment, notwithstanding the dizzying growth of home prices in the most overheated markets (as of May, almost 30 per cent year-over-year in Vancouver, and approximately 16 per cent year-over-year in Toronto).






Source: http://www.canadianrealestatemagazine.ca/news/canada-bubble-fears-unfounded--mortgage-industry-209783.aspx