It’s a tale of two Canadas that brokers are all too familiar with and, following the Bank of Canada’s housing forecast, brokers are reiterating calls for regional regulations.
In its monetary policy, released Wednesday, the BoC highlighted the differences between eastern and west western Canada, saying that the eastern provinces are more consistent with a soft landing, while cities in the west continue their growth. The bank believes the imbalance will carry on and the gap may get bigger.
“That is exactly why the regulations for mortgage lending needs to be sectioned off in regions,” Kent Farnsworth of Mortgage Alliance
Simply Mortgages wrote MortgageBrokerNews.ca. “Would it be too much to ask for OSFI to do just a few hours researching so the most of the country isn't penalized for what is happening in three or four cities?”
The Bank of Canada has once again raised concerns about the overheated markets in Vancouver, Calgary and Toronto; contrasted by eastern Canada, which it expects to experience a soft landing.
“While a good part of the strength can be explained by favourable demographics and strong employment gains in parts of the country, it nonetheless suggests that household imbalances could increase further,” the BoC said.
One method of correcting these imbalances is to investigate region-specific regulations, as opposed to country-wide measures that are often introduced.
However, there are some who understand the national approach.
“You have to keep regulations Canada wide. Certain provinces boom due to their production of a resource or product. The bust is for the same reason,” Teague Brinkworth of the Mortgage Centre wrote. “It happens to different provinces at different times and the only way to minimize the impact of the ‘crisis’ or to stop a bubble is to keep a national view of conservative lending.”