Banking regulator warns lenders not to become complacent about mortgages
VANCOUVER — Canada’s banking regulator warned lenders Monday to remain strict in the way they underwrite mortgages as a way of preventing crises for financial institutions if low interest rates rise and property values drop.
Jeremy Rudin of the Office of the Superintendent of Financial Institutions said prudent lending practices have never been more important because of the current economic environment.
“When house prices have been rising for several years and interest rates have remained at all-time lows, complacency can set in,” the superintendent told a meeting of mortgage professionals in Vancouver.
“Lenders might be led to believe that weak underwriting standards will be mitigated by ever-rising collateral values.”