The Bank of Canada recently stated it believes regulation and supervision – not monetary policy – are the keys to aiding economic recovery.
“We have made it clear that household imbalances are at the top of our list of vulnerabilities. But monetary policy is not the primary tool to address these risks,” Carolyn Wilkins, senior deputy governor for the Bank of Canada said in a speech last week. “Regulation and supervision, along with targeted macroprudential actions, are more effective lines of defence.”
Several brokers viewed the announcement as possibly hinting at further mortgage rule tightening, much to their chagrin. And many are calling for the government to turn its focus elsewhere.
“Financing guidelines are tighter than I have seen in 24 years of lending,” Lisa Holly of Dominion Lending Centres
Great Lakes wrote on MortgageBrokerNews.ca. “Why not take a look at credit card debt first and limit those interest rates? Give the public a bit of breathing room and a break from the mortgage lending nightmare we have experienced since 2008.”
And while several have agreed with her position, one leading broker has pointed out the lack of power the government has in reining in this type of debt.
“Please remember car loans, credit cards and personal LOCs are all areas that the government has zero involvement in other than (to) regulate maximum interest and contract law. They are truly consumer products,” Ron Butler
Butler Mortgage said. “The government is intimately involved in the mortgage business through CMHC and the federal backing of the other mortgage insurers.”
A recent Bank of Canada announcement has dredged up an age-old debate but is it one that should finally be put to bed?