Experts say Canada's banking regulator is taking the right approach by signalling it won't move forward on a swath of proposals from earlier this year aimed at limiting the number of overstretched borrowers following stakeholder feedback. Bank towers are shown from Bay Street in Toronto's financial district, on Wednesday, June 16, 2010. THE CANADIAN PRESS/Adrien Veczan
TORONTO – Mortgage strategist Robert McLister says the real estate industry is likely breathing a sigh of relief after Canada’s banking regulator signalled it might not move ahead with some proposed tightening of its mortgage lending rules.
The Office of the Superintendent of Financial Institutions floated the proposals in January as part of its wide-ranging review of the B-20 mortgage underwriting rules.
It included potential additional conditions for a stress test, where would-be borrowers must prove they could continue to make mortgage payments at a higher interest rate.
It says stakeholders were generally not supportive of additional debt service measures and raised concerns about the disproportionate impact that new industry-wide measures could have on smaller lenders.
McLister agrees with concerns that tougher loan-to-income restrictions could scale back lending.
He says flexibility for lenders can be better maintained if the regulator does not institute defined debt ratio limits for uninsured federally regulated mortgages.
This report by The Canadian Press was first published Oct. 17, 2023.
