Could CMHC be restrained in upcoming budget?

The federal budget that will be released at the end of the month may be the most sweeping in years, as the Conservatives use their majority status to push through tough austerity measures. One area that may be a focus of the budget is the country's hot real estate market, as many bank executives and economists continue to warn of a pull back in home prices.

Marc Rouleau, Vice President of Fixed Income at Standard Life Investments, tells BNN the federal government is "clearly concerned" about the dramatic rise in home prices in some of the country's largest metropolitan areas.

"They want to be ahead of the game," he says.

Rouleau says the budget may make changes to the Canadian Mortgage and Housing Corporation, the government-backed mortgage insurance provider. Rouleau says the budget may introduce tighter rules for CMHC.

"Essentially this is a question of how banks get mortgage insurance and how they can repackage the mortgages they have on their books and sell them into the fixed income markets," he says. "In a nutshell if they have to pay greater fees, premiums or insurance schemes…that in the long run will translate into slightly more expensive fees for mortgage borrowers."