Canadian Mortgage and Housing Corp announced a drop in mortgage refinancing by 40% since Finance Minister Jim Flaherty imposed a stricter rule earlier this year. The changes in rules included reducing the maximum amount that consumers can borrow in refinancing their mortgages and cutting the maximum term of new insured mortgages.
Some economists, like Benjamin Tal, deputy chief economist at CIBC, believe that further rule tightening can push Canadian economy into recession, while others are continuing to be concerned about the high consumer debt level in Canada. Some observers are predicting a home price drop in coming year, and this will hamper borrowers even more.
Meanwhile, CMHC enjoyed a profit rise in second quarter despite the rule changes, mainly due to mortgage bonds, lower expenses, and the sale of financial instruments.
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