Posted in Canadian Mortgage News

Canada expects moderate growth in 2012: Flaherty

NEW YORK (Reuters) – Canadian Finance Minister Jim Flaherty said on Tuesday he expected Canada to post moderate growth this year, noting that the country’s recovery remained fragile and Europe’s sovereign debt crisis continued to pose risks to the global economy.

Flaherty also reiterated he had no plans to take further steps to rein in Canada’s housing market, which some analysts say is overheating.

“I have no present plans to intervene in the housing market in Canada,” Flaherty told reporters in New York.

“There has been some moderation in the market of late. I would prefer the market itself to correct to the extent a correction is necessary.”

The government and central bank have been cautioning Canadians of the risks of taking on too much debt, particularly through mortgages, with interest rates low and home prices high.

Flaherty has tightened rules three times since 2008 in the mortgage insurance market but left them untouched in the federal budget released at the end of March.

The budget did propose enhanced supervision of the federal housing agency that issues mortgage insurance. Asked about that change, Flaherty said the Office of the Superintendent for Financial Institutions – Canada’s banking regulator – as well as his Department of Finance was looking at the issue.

Flaherty said he expected Canada to see moderate growth this year, which was the basis for the government’s recent budget.

The economy added a surprising 82,300 new jobs last month, the most since September 2008, while the unemployment rate fell to a six-month low of 7.2 percent.

“If we get stronger growth, that’s terrific, but remember the economic recovery is fragile,” said Flaherty.

“There are serious issues that persist in Europe, particularly with respect to Spain.”

A weak auction of Spanish bonds last week rekindled investor fears over the extent of Europe’s debt crisis.

 

 

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