Fair point and it would most certainly apply to some people...particularly in the two inflated markets we all know exist. But the reality is, people are going to borrow. Why not let them do so against a secured asset at the lowest possible rate instead of pushing them toward B lenders, Unsecured LOC's and 18% credit cards? If you want to argue that no one should spend beyond their means then that is an entirely different argument but in real life people borrow.

I think your point loses steam on a national level as well, which is what the majority of mortgage rule changes seem to miss. An average of 54% LTV means nationally a lot of people have earned the right to borrow from their homes at the lowest rates. Their equity isn't imaginary nor did it arrive overnight. Making it more difficult for these folks (who have an arrears rate of one third of one percent) doesn't seem necessary to me.