Canadian Finance Minister Joe Oliver said today he will continue to reduce potential risks to taxpayers of a downturn in the housing market after banks cut their lending rates to the lowest in about a year.
Oliver told reporters he spoke to Bank of Montreal (BMO) Chief Executive Officer Bill Downe about the lender’s decision to lower mortgage rates in time for the spring home-buying season. Oliver said in a statement earlier today he’ll keep monitoring the market. They were his first comments on housing since replacing Jim Flaherty on March 19.
Policy makers, led by Flaherty, have tightened rules that govern mortgage lending amid concern the balance sheet of the federal agency that backstops mortgages has grown too large. The value of home loans insured by Canada Mortgage & Housing Corp. has almost doubled since the end of 2006.
“The government is gradually reducing its involvement in the mortgage market,” Oliver said he told Downe.
Most recently, the federal government began collecting a“risk fee” of 3.25 percent from Canada Mortgage & Housing on the insurance it writes.