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Will OSFI's New Chief Fiddle with Mortgage Rules?

July 8, 2021
4 mins
Mortgage regulation.jpg

Runaway home prices and consumer debt have some worrying that officials will restrict mortgages further. Others are hoping for it, to take froth out of the market.

And when a new head regulator takes over, potential policy changes become top of mind.

That brings us to last week. On June 29th we got a new regulator kingpin, Peter Routledge. He's now OSFI's Superintendent of Financial Institutions. It's one of the most influential positions in Canada's mortgage regulation universe.

A new body in an office key to housing growth begs the obvious question: what's he going to do with mortgage regulations, if anything?

Routledge is an interesting cat. He's been a public servant but he's also been a banker-type, formerly of National Bank Financial.

Here's what we know from his background and recent speeches.

In one of those speeches he was asked, "Is the mortgage debt situation unsustainable.” He answered: “I’ll give you a clear answer on that: No.”

Routledge characterized housing finance as a “productive private marketplace creating wealth and housing for Canadians, checked by prudential regulators that set prudent boundaries to sustain [stability] or lean into irrational exuberance.”

He added, "There are a lot of [bank capital] buffers [in place] to absorb the unanticipated." (That's putting it mildly. Bank capital buffers are in the tens of billions, a record high as a matter of fact.)

He explained: "I would like household debt to income levels to come down. Not all at once, but gradually." But, "It is difficult for that to occur within a low interest rate environment," he said. "Given the facts we have, I am not overly concerned with household leverage...let’s wait and see if income grows faster than debt [in the economic recovery].”

During a recent BNN interview he mentioned four risks he wants to focus on at OSFI. Not one of them related to housing, mortgage or debt risks.

Routledge seems mostly satisfied with existing mortgage policy. "In my view, [the new uninsured mortgage stress test] will reinforce sound residential mortgage underwriting and thereby bolster the safety and stability of Canadian financial institutions," he told the Empire Club of Canada during a speech in April.

All in all, we'd post long odds that Routledge proposes further significant mortgage changes this year. Probably not next year either. He'll likely let rising interest rates decelerate housing naturally.

Rob McLister

Rob McLister has been informing mortgage consumers and professionals since 2007. In that time, he’s written more than 2,500 mortgage stories for publications ranging from the Globe and Mail — where he presently serves as mortgage columnist — to the National Post, Maclean’s, Canadian Mortgage Trends and Regularly quoted throughout the media, Rob is a committed advocate of greater transparency in the mortgage industry. He’s also been a vocal consumer advocate for more sensible mortgage regulation. In 2011, he launched two mortgage fintechs: mortgage comparison website and digital mortgage broker intelliMortgage Inc. The former is the go-to source of Canadian mortgage news and the only site comparing all publicly advertised prime mortgage rates. The latter is Canada's leading online mortgage provider for self-directed borrowers. Both companies were acquired in 2019 by RATESDOTCA Group Ltd.

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