We live in a crazy world. Canada's mortgage market has traditionally had a high level of Government involvement (through guarantees, guaranteed mortgage insurance and funding of non-banks). The Canadian government, fearing it is causing a housing debt bubble, is gradually seeking to back away from this tradition.
At the same time Australia's Senate Economics Reference Committee, in it's report into 'The post-GFC banking sector', and in response to submissions by the MFAA (Mortgage and Finance Association of Australia), has suggested we investigate it further.
Yes, just at the time the Canadians are becoming aware of the flaws in their model, the MFAA wants our pollies to introduce it in Australia. Effectively they want to use taxpayer dollars to erode the profits of the banks, which taxpayers are already on the hook for financially. It's like Woolworths lenders getting a submission on why they should subsidise the expansion of Coles and saying 'yes, we should look into that' rather than 'are you kidding me'?
The big question is when will enough be enough for the property industry? Owners of Australian property have (or have had) artificially low interest rates, negative gearing, home buyer grants, bank guarantees, capital gains tax concessions and accelerated tax depreciation. They even get the national rental affordability scheme tax offset.
Do we really need the Government providing more guarantees, insurance and funding on top? Particularly as renters, who are also taxpayers, get diddly squat. Worse, they are subsidising their own demise (if we assume they are potential future purchasers).
If only their were some industry associations for renters, they might demand tax deductible rent, first renters grants, higher interest rates and tax free interest on their cash savings (from renting, not owning) just to balance things up a bit. Unfortunately, for those renting, they will continue to get nothing, whilst politicians continue to throw taxpayer dollars at the house price problem.
We can only hope, at some point in the politicians realise the Canadians are pulling back. It might get them thinking that getting rid of stuff, not adding it, would be a far more productive activity. Rather than reducing the cost of debt, the politicians could work on reducing the cost of housing - starting with the elimination of negative gearing.
It's far too much for renters to hope for taxpayer largesse in their direction. But a shot at buying a reasonable priced house one day would be a greater reward.
Disclosure: The author is an owner, not a renter.