Will Canadian lending guidelines be tightened in the coming months?
OSFI (Office of the Superintendent of Financial Institutions) is apparently worried that Canadian banks and mortgage lenders may be making some of the same errors that led to the U.S. real estate and mortgage crisis. According to Bloomberg News, OSFI is specifically worried about stated income lending and home equity lines of credit and the potential for certain borrowers to get into debts they cannot repay.
However, Bloomberg also notes that the Canadian Banking system has been rated the soundest in the world for four straight years with no Canadian lenders needing a government bailout during the recent recession and credit crisis, unlike the U.S. and European banking systems, which remain precarious.
According to Canadian banking industry figures, the percentage of mortgages in arrears in Canada currently sits at .39 of one percent, hardly a red flag for loan quality in Canada. Even still, there may be some additional tightening of Canadian lending guidelines this year as cautious regulators see how badly the credit crisis has damaged the U.S. housing market and their overall economy, and strive to avoid anything like that in Canada.
Stay tuned. In the meantime, if you ever have any questions, please get in touch. We are always aware of the current environment and the resulting implications, so we can help you find a mortgage that gives you an edge and meets your current needs and future goals.