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Alarm bells may signal tightening mortgages

To tighten or not to tighten — that is the question facing Finance Minister Jim Flaherty when he brings down the budget on March 29.

Flaherty has been ringing the household-debt alarm bells quite often in recent months and many in the banking and mortgage industries believe it is a precursor to another round of tightening mortgage regulations.

It would be the fourth tightening in four years, further slowing what Flaherty has called Canada’s over-heated housing market, which the previous three have already accomplished, putting first-time home buyers, in particular, on the sidelines but also slowing the mid-range move-up market.

With purchasing power curtailed, it’s not a stretch to think recent warnings are aimed at lenders, encouraging them to do the tightening and not leave it to the government.

More government-imposed regulations would be heavy handed, said Ed Clark, TD Bank CEO.

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