Federal banking regulator steps up supervision of mortgage underwriting
OTTAWA — The federal banking regulator served notice to the Canadian mortgage lending industry on Thursday that they’ve got their eye on them.
The Office of the Superintendent of Financial Institutions Canada sent a letter to all federally regulated financial institutions telling them it’s stepping up scrutiny of mortgage lending amid concerns about rising home prices and the consequences for lenders if the economy weakens.
The regulator said low interest rates, record levels of household debt and the sharp rise in house prices in some cities such as Vancouver and Toronto could generate significant loan losses for banks and other lenders if the economy deteriorates.
“With rapid price increases in some areas and current exceptionally low interest rates, the risks are getting larger,” superintendent Jeremy Rudin said in a statement.