Support for the federal government's recent crackdown on mortgage lending rules is much higher in the Western provinces than in the East, according to a survey released Wednesday.
Among respondents, 64 per cent of those in British Columbia and 56 per cent in Alberta said they agreed with the changes announced last month, which include ending government backing for mortgages with amortizations of longer than 35 years and with downpayments of less than 5 per cent, according to the poll conducted by Angus Reid for mortgage lender ResMor Trust Co.
Agreement with the clampdown on lending standards, which the government said it will implement to lower the risk of a U.S.-style housing bubble, was lowest in the Atlantic provinces and in Quebec. Just over one-third of people surveyed in those regions said they backed the changes, according to the poll.
Residents of Manitoba and Saskatchewan were 47 per cent in favour of the changes, and in Ontario 46 per cent backed the government's move.
Consumers in markets which have experienced the greatest degree of price volatility are most wary about the impact of higher-risk mortgage products on their financial stability, said Darren Thompson, vice-president of lending at ResMor.
“They know that there can be a slowdown very quickly, and if that occurs they're better positioned with a 25-year mortgage than a 40-year mortgage where they have little or no equity in their home,” Mr. Thompson said.
While it's tough to draw conclusions from a poll, the results appear to be related to how sharply prices have risen in different regions in recent years, said Douglas Porter, deputy chief economist at BMO Nesbitt Burns.
Prices are now falling in a number of overheated markets including Calgary, Edmonton and Victoria, causing some critics to say the government missed the boat by cracking down on lending rules too late.
But home prices in most parts of the country are still much higher than they were when the boom started about seven years ago, and prospective buyers sidelined by these big gains may be hoping tighter lending standards continue to force out speculators and make homes more affordable, Mr. Porter said.
A total of 45 per cent of survey participants said they agreed with the statement “the federal government needs to protect Canadian homeowners.”
However 30 per cent of those who didn't own homes said they were concerned the changes would reduce their options when they are looking to buy.
The poll also found many people, particularly non-homeowners, remain puzzled about the implications of the changes, with 17 per cent saying they did not understand the new rules.
This finding came as a surprise, and shows the industry has to step up its education efforts, Mr. Thompson said.
The online poll included a national representative sample of at least 1,000 Canadians aged 18 or older. It was conducted on July 25, 2008, and has a margin of error of plus or minus 3.1 per cent, 19 times out of 20.
© The Globe and Mail
