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Under a bill tabled in the House the Office of the Superintendent of Financial Institutions will be given oversight of CMHC. Laredo says it will only have an effect on the availability of mortgage funds if “CMHC adopts tighter underwriting standards because of new oversight by the bank regulator.
“Or, on the other hand, if the banks adopt tighter lending standards because of pressure from the Department of Finance,” she says.
But, Laredo notes that, “there is a general acknowledgement that lending standards have been lowered in recent months.
She says what would have significant impact on mortgage lending is “a significant increase in lending rates. The Bank of Canada has talked about an imminent increase in interest rates, but such increases are unlikely in the near future because the Canadian economy is not on solid ground – witness the decrease in the GDP in the last quarter.”
Laredo’s prediction: “Nothing much will change until interest rates increase. CMHC changes will not matter. If the intent is to dampen the market, there is a need to tighten the rules for what mortgages CMHC will ensure.”