UPDATE 1-Canada finance minister sets announcement, housing attainable subject

(Recasts, adds feasible measures to cool housing industry)

By Randall Palmer and David Ljunggren

OTTAWA Dec 10 Canadian Finance Minister Bill Morneau has scheduled an announcement for Friday morning, and while no topic was offered, the government is facing a crucial choice on how to cool a heated housing market.

Canadian household debt as a percentage of income is at an all-time higher, in big component because of huge mortgages taken on as housing rates rise, particularly in the main cities of Vancouver and Toronto.

Canada avoided the housing crash of 2007 that hit the United States and triggered the worldwide monetary crisis. But a post-recession housing boom, fueled by record-low borrowing fees, has prompted some analysts to warn a bubble may possibly be in the functions.

Finance Division officials have for two or 3 years been recommending some form of action to attempt to avoid economic difficulty, 1 business supply said.

The Conservatives, who lost power to the Liberals in the Oct. 19 election, had been contemplating action if they won, the source said.

A second nicely-placed supply stated a lead alternative getting deemed was to increase the percentage down payment essential for insured mortgages over a particular dollar quantity, beyond the existing 5 %.

Such a tiered program, with a greater percentage essential the larger the mortgage, has the benefit of attempting to target the hotter markets with no shaking places exactly where rates are considerably reduce.

The drawback is that it could add to the woes of markets in cities like Calgary, which still have high-priced housing because of past resource booms but are now suffering since of slumping oil and commodity costs.

Below Finance Minister Jim Flaherty, the former Conservative government stepped in four times from 2008 to 2012 to tighten mortgage lending guidelines. His successor, Joe Oliver, displayed much less concern.

A spokesman for Morneau declined to comment. His announcement will be at 9:30 a.m. (1430 GMT) on Friday. (Reporting by Randall Palmer and David Ljunggren Editing by David Gregorio and Peter Cooney)