In spite of the fact that Canadian mortgage growth hit a 17-year nadir, the Big Six are still padding their coffers.
“The banks are still winners,” said Steve Garganis, a Mortgage Architects broker. “The mortgage rule tightening by the Trudeau government has forced consumers to go to banks, as they lend their balance sheets and have lots of cash.”
There is mounting pressure on the Office of the Superintendent of Financial Institutions to amend B-20 after housing markets countrywide slowed considerably last year. A Calgary city councillor this week called on the mayor to lobby the federal government for tweaks to B-20. Yesterday, the Toronto Real Estate Board echoed those sentiments.
"Even though we're seeing positive government action on a number of key housing files, one area that needs to be revisited is the imposition of the OSFI-mandated two percentage point mortgage stress test,” TREB’s CEO John DiMichele said in a statement. “While we saw buyers return to the market in the second half of 2018, we have to have an honest discussion on whether or not today's homebuyers are being stress tested against rates that are realistic… Looking through this lens, policymakers need to be aware of unintended consequences the stress test could have on the housing market and broader economy.”
If chartered banks similarly lobbied for looser rules, change would at least be conceivable. However, that will not happen.
“While the overall mortgage volume has slowed, the losers are the non-bank lenders because they must portfolio insure everything and they can’t insure refinances, houses over $1 million, or rentals of single-unit properties,” said Garganis.
In a rising rate environment, he furthermore questions the sapience of overburdening borrowers with higher payments while trying to protect the financial system from collapse.
“Rates are also higher due to the higher cost of funds, not just the Bank of Canada rate increases,” Garganis continued. “The government has done it again, supposedly taking action to help consumers. How does raising payments and forcing consumers to pay rate increases help? It’s time to scale back all the unwarranted lending changes because the pendulum has swung too far.”