Flaherty calls on banks to ‘fix’ mortgage market

Norm Betts/Bloomberg

By Thomson Reuters, Financial Post - April 4 2012

Canada’s finance minister said on Wednesday he would rather not tighten mortgage rules again to curb high

household debt and that banks themselves are taking on that job by becoming more strict with their lending

criteria.

 

Jim Flaherty said he has seen signs of moderation in the Toronto condominium market and expects to see a

similar trend in Vancouver, one of the country’s hottest real estate markets.

 

“Part of that is based on what I’m being told by people who build condominiums, and also what I’m being told by

some of our banks about their standards becoming more stringent with respect to their loans for condominium

development,” Flaherty told reporters in Vancouver after making a speech there.

 

Flaherty said it was up to markets to “fix” the housing and debt problem, not the government.

 

“I’ve tightened up the mortgage insurance market three times … I really don’t want to do it again,” he said.

Advertisement

“And I’m glad that some of the banks – at least one of the bank executives yesterday indicated that he agreed that

actually the banks should exercise prudence and not rely on government to do it for them,” he said.

 

Bank of Nova Scotia Chief Executive Rick Waugh said on Tuesday that the simmering housing market gives

reason for caution, but that it’s up to the country’s banks, rather than the government, to manage the risks of their

massive mortgage portfolios.

 

Several other bank executives – Toronto-Dominion CEO Ed Clark in particular – have said they would welcome further government moves on mortgages.

 

The government and central bank have been warning Canadians of the dangers of taking on too much debt,

particularly through mortgages, at a time of historically low interest rates and high housing prices. The ratio of debt

to personal disposable income hit a record high last year and has moderated somewhat since then.

 

Despite some resemblance to the U.S. housing market prior to the crash, most economists expect a soft landing

in Canada.

 

Flaherty has tightened rules three times since 2008 in the mortgage insurance market but left them untouched in

the federal budget last week, to the surprise of many.

 

The budget did propose enhanced supervision of the federal housing agency that issues mortgage insurance.

Flaherty said the banking regulator, the Office of the Superintendent for Financial Institutions, was studying the

matter.

Comments:
No comments

Post Your Comment:

The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Real Estate Board of Greater Vancouver (REBGV), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the REBGV, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the REBGV, the FVREB or the CADREB.