In an article in the Globe and Mail on Saturday, it was reported that the heads of the big six banks in Canada held private talks with policy makers to urge them to tighten mortgage rules fearing a “U.S. style binge-and-collapse in housing”.
This latest article seems to add to what I wrote about in my December 21, 2009 blog post Larger downpayments/shorter amortizations on the horizon?
As I opinionated at the time, I continue to believe that we are not in a “housing bubble”. The government should proceed very, very cautiously before making any drastic changes that will hurt the prospects for the majority of Canadians in owing their own homes.
My fear is that if this report is true, the major lenders in Canada may possibly start tightening their own lending criteria arbitrarily. This is quite possible as they have done so already in some areas of lending. For example, some now require a much higher credit score for a mortgage approval than they did 18 months ago. Obviously, this is each lender’s right to set the “rules” as it is their money and risk.
Here is a link to the full article.
What are your opinions? I would love to hear them.