Bank of Canada’s Poloz says mortgage market should offer more product choices

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OTTAWA — Bank of Canada governor Stephen Poloz says it’s time for fresh ideas when it comes to mortgage options in Canada.

In a speech today in Winnipeg, Poloz says changes could include encouraging loan terms longer than five years, the creation of a market for private mortgage-based securities and the launch of shared-equity mortgages for first-time home buyers.

He says these innovations would help provide more flexibility for borrowers, lenders and investors, while also lowering risks in the financial system.

Poloz says the system has worked well — but notes there’s always room for improvements, particularly since few mortgage-market innovations have been introduced in his lifetime.

In its spring budget, the federal government said it would create shared-equity mortgages as a way to provide interest-free loans to help first-time home buyers add to their down payments.

Poloz is making the recommendations as he monitors three key housing-market stories — the oil-slump-driven slowdown in Alberta and Saskatchewan, the steep drop in resale activity in Toronto and Vancouver, and steady growth in many other parts of Canada.