Mortgage rule changes are "credit positive": Moody's
| Tuesday, 25 January 2011
Changing mortgage rules again are “credit positive” for Canada’s chartered banks and their bondholders, stated influential bond rater Moody’s Investors Service.
“The overall measures are credit positive for the banks and the stability of the Canadian systems as a whole,” Moody’s senior vice-president Peter Nerby stated in a note to clients.
This is the third tightening on mortgage lending since 2008, created to help prevent the same type of U.S. mortgage market risks that eventually led to the deterioration of U.S. bank asset quality, said Nerby.
Since the mortgage announcement, business and finance observers have varied in their opinions about whether this will aid the Canadian economy by preventing rapidly increasing household debt, or hinder it by slowing sales and market activity.
Last week, Dominion Lending Centres president Gary Mauris met Finance Minister Jim Flaherty at a pre-budget roundtable discussion in Regina. On behalf of the mortgage broker industry, he told Flaherty and the other participants that the sweeping policy change wasn’t necessary.
“Mortgage default in Canada is the lowest in the world,” said Mauris in a summary of the meeting. “Rather than pairing back the amortization term from 35 years to 30, they should have made the borrower qualify at the payments based on a 30-year amortization and kept the maximum at 35.”
Posts
No comments:
Post a Comment