OSFI to consult public before making changes
OSFI has held off on further tweaks to underwriting rules, but amid speculation that it may soon spring into action, one representative has assured MortgageBrokerNews.ca the public - including brokers - will be allowed their say.
“If we decide to revise Guideline B-20 we will undertake public consultations,” Annik Faucher of OSFI told MortgageBrokerNews.ca. “No decisions have yet been reached.”
In May of this year, OSFI issued a report on the real estate market, wherein it expressed the importance of regulating interest rates.
“As noted by the outgoing Governor of the Bank of Canada, it is important that regulation and supervision be a strong line of defence to some of the consequences of low interest rates,” Superintendent Julie Dickson said in the May address. “Sustained low interest rates are a major area of focus for OSFI.”
Public rumblings about impending "interference" by OSFI have come on the heels of tighter mortgage rules and OSFI's own stricter underwriting guidelines. That action last July hasn't necessarily been enough to cool the market.
“The impact of low interest rates can clearly be seen in the Canadian real estate market,” Dickson said. “Consequently, the real estate lending market has been a significant area of focus for OSFI, because of the significant incentives for consumers to borrow and for banks to maintain revenues, the size of mortgage lending portfolios, the concerns about some markets being overvalued, and the possibility that customers’ debt serviceability could be masked by low interest rates.”
At the time of May’s release, OSFI intimated its satisfaction with the steps taken by Finance Minister Jim Flaherty to cool the market; though Dickson also said they would keep a watchful eye on further developments.
“We continue to monitor the mortgage market and watch the effects of the changes that have been made in this area.”
With the market bouncing back from the initial slowdown following last summer’s regulation changes, could OSFI be readying itself to step in?
--Justin da Rosa, Mortgage Broker News