Poloz hints at future policy

Poloz hints at future policy

Poloz hints at future policy Brokers can breathe a sigh of relief, following Stephen Poloz’s latest comments on what role the central bank should play in setting economic policy.

“The Bank of Canada’s view is that monetary policy should be the last line of defence against threats to financial stability, behind the joint responsibility of borrowers and lenders, appropriate regulatory oversight within the financial sector, and sound macroprudential policies,” Governor of the Bank of Canada Stephen Poloz said during a speech in Washington at the National Association for Business Economics over the weekend.

That less-is-more stance will be welcomed by brokers, many of whom struggled following aggressive mortgage tightening by the government over the last few years.

Those, of course, included lowering amortization periods, lowering loan-to-value maximums, and limiting the maximum gross debt service ratio.

Poloz also said it isn’t the role of monetary policy to protect individuals from making bad choices. Still, he acknowledged macroprudential policies, especially in the housing sector, have been effective.

“The International Monetary Fund and several central banks—including the Bank of Canada—have … found that some macroprudential policies, such as limits on mortgage loan-to-value ratios and increased capital weight on bank holdings of mortgages—can moderate the growth of credit and house prices as well as improve the average creditworthiness of borrowers,” Poloz said. “The impact of recent macroprudential tightening in Canada, which was aimed primarily at rules for insured mortgages, appears to support these findings.”
  • Michael Mitchell 2015-10-14 9:35:24 AM
    Mortgages are not the problem,Banks issue lines of credit and credit cards knowing full well they will put people over the imposed TDS/GDS rules.
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  • Matt 2015-10-14 9:53:04 AM
    Yeah... only banks issue debt over client capacity. Not broker of course...Give your head a shake.
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  • Debbie 2015-10-14 10:22:43 AM
    Matt...Brokers don't issue any other debt. Only mortgages. Very few avenues offer a broker the opportunity to sell unsecured LOC or credit cards, and usually only sold to establish credit, not increase the debt service. We are not in the business of up-selling products like the banks are. I've been on both sides of the street and I know banks want you to sell a full suite of products. Most reps are only looking at what they can sell, not thinking that the products they just sold the client may well ruin the chance of qualifying for a mortgage.
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