Earlier this week, the Canadian Association of Accredited Mortgage Professionals (CAAMP), held its annual Mortgage Forum. At the Forum Julie Dickson, Superintendent of the Office of the Superintendent of Financial Institutions (OFSI), made headlines with her speech on the residential mortgage market.
Here are some of the highlights of her speech:
The basics are not rocket science. But time and again, it is by ignoring the basics that banks get into trouble. Indeed, while many observers have suggested the global financial crisis was caused by complex products and banks going beyond traditional lending, in fact major problems within traditional lending were a source of the problem — namely, unsound mortgage underwriting.
Consumers must be considered here because, while banks may be able to withstand shocks, consumers may not. Banks have to set aside reserves for unexpected losses and are typically far better situated to deal with shocks than consumers — who may be highly indebted and therefore particularly vulnerable to significant increases in interest rates or unemployment.
Interested in reading more from OSFI at the CAAMP Mortgage Forum? There’s a great article in Mortgage Broker News here. By all means, feel free to contact us anytime you have mortgage-related questions as well.