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Flaherty makes it harder to buy homes, tightens mortgage rules

Federal Finance Minister Jim Flaherty is making it more difficult for people to qualify to buy new homes.

He is responding to growing concerns that Canadians may be taking on too much debt, although he stresses that there is no housing bubble in Canada’s real-estate market, yet.

The finance minister said all borrowers will need to meet stiffer criteria to take out mortgages.

He’s also raising the downpayment that borrowers must pay for speculative investments and is putting on tighter restrictions on how much money people can borrow against their houses.

Economists have advised the minister to be stricter on who can get new mortgages, but they’ve also warned the government not to put on the brakes too strongly, in order to preserve the fragile economic recovery.

The Bank of Canada has been warning for months that homeowners should ensure they can absorb an increase in their floating-rate mortgages once rates start rising, likely as early as this summer.

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