Canadian Banks Push Back Against Taking on More Mortgage Risk
- Government proposals include deductible in case of default
- Banks say reinsurance, higher covered bond limits alternatives
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Canada’s financial industry is urging the federal government to consider alternatives to proposals that could require them to take on a greater share of mortgage defaults through a deductible -- calling it one of the biggest shakeups to hit housing finance in 50 years.
"This submission has questioned whether a deductible is the most effective way to rebalance risks within the housing finance system,” the Canadian Bankers Association said in a report on Tuesday. “The industry believes that policy alternatives should be considered to achieve the same ends, but are simpler and less disruptive to the existing lending structure.”