Banks unaffected by stalled mortgage growth

Banks unaffected by stalled mortgage growth

Banks unaffected by stalled mortgage growth

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.”

3 Comments
  • David 2019-02-07 9:23:52 AM
    Trudeau has yoga posed his head right up his own ass. He and his goons have no foresight, no nuance, no real plan, they created blanket legislation for the entire country all to regulate the two largest markets in Canada (Vancouver and Toronto). All he had to do was set the new B20 qualifying rules to only apply to properties over $500K or even by area code. Instead we have middle class working families in smaller markets who can no longer qualify for low to middle range priced homes. This is Liberal elitism at its worst, this silver spoon fed jackhole has never had to qualify for a loan in his life and has no concept of the damage he has done to the housing industry, the broker industry and the economy as a whole. This liberal party is in the pockets of the big banks as much as any political party in the history of this country. Vote this joker out before consumer choice is squashed and we go back to the old days where the big banks set all the rules and run roughshod over the public.
    Post a reply
  • Berna 2019-02-07 4:59:16 PM
    Very well said.
    Post a reply
  • Train 2019-02-08 11:12:56 AM
    Agree 1000000000000000000000000000000000000000000 %
    couple of losers running Canada and USA, the finance minister is a crook, yet these
    cats all were voted in ... Now they talking about 30 year .... sure they are, this is all bait so
    they can be re-elected .... Liberals will not change ... Gettem Gone .....
    Post a reply