Canadian banks not immune to housing bubble: OSFI official | Mortgages | Personal Finan... - 0 views
business.financialpost.com/...o-housing-bubble-osfi-official
canadian banks housing bubble mortgages finance canada
shared by Kevin Mao on 17 May 12
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Canada’s banks, ranked the soundest on the planet by the World Economic Forum, aren’t immune to collapses triggered by falling housing prices
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Previous failures of Canadian financial institutions were due to bad real estate lending and sharp falls in housing prices, and these can happen again
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“Just because nothing happened in Canada in 2008 (a U.S.-centered crisis), does not mean that Canada is not vulnerable to a housing correction now.”
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Finance Minister Jim Flaherty has tightened mortgage rules three times and put the federal housing agency’s books under regulator oversight
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Bank of Canada Governor Mark Carney has repeatedly warned household debt is the economy’s biggest domestic risk.
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“The market may break because the fundamentals are not sound (i.e. overvaluation of homes), not because of OSFI guidance,” Melessanakis wrote in response.
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Canadian existing home sales rose 0.8% in April from the previous month and 11.5% from a year earlier
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Flaherty reduced the amortization period on mortgages backed by the government to 30 years from 35, the third time since 2008 he has tightened rules for home loans
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Flaherty introduced legislation April 26 that includes measures to strengthen oversight of Canada Mortgage & Housing Corp.
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The law allows OSFI to review CMHC’s books at least once a year, and prohibits banks from using insured mortgages to back covered bonds,
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Canadian banks should not be “lulled into a false sense of security” by steps policy makers are taking to prevent another financial crisis
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in some places like Vancouver, maybe Toronto, obviously you’re going to have greater risk there of price volatility,”
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last financial institution failure in Canada occurred in 1996, when Security Home Mortgage Corp. collapsed
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Eighteen financial institutions failed in the 1990s, including Confederation Life Insurance Co., which had $19.2-billion in assets at the end of 1993. There were 23 failures in the 1980s, including Northland Bank, which had $1-billion in assets