Peter, executive director of financial industry regulator OSFI Peter Routledge , today, December 28, 2022, I was interviewed by financial post. The news title is Why OSFI head Peter Routledge is ‘optimistic and wary at the same time’ heading into 2023

As you can tell from the title, Peter's view is cautiously optimistic. Here's what he thinks:

  1. Based on the speed of interest rate increases, OSFI has increased bank equity ratio requirements and urged banks to operate conservatively and steadily. He was referring to the fact that on February 1, 2023, the capital adequacy ratio of commercial banks will increase from the current 2.5% to 3%. BMO Bank responded by issuing additional shares to replenish its equity, rather than planning to reduce its lending business.
  2. In the face of high interest rates, Canadian households and businesses have shown high resilience, and regulatory authorities will pay close attention to changes in the flexibility of debt affordability.
  3. Comparing the real estate market and debt situation before the subprime mortgage crisis, the current real estate debt situation is more stable. If the various exogenous events that occurred this year had occurred in 2005-2007, the bank's losses would have been greater. Therefore, Peter is confident about the current situation.
  4. The potential risk associated with a home equity line of credit (HELOC) is not significant. Data from regulatory authorities show that the proportion of the available credit limit is quite low. For an available credit limit of 100,000 dollars, the amount occupied is about 5,000 dollars, which is 1/20 of the limit.
  5. Over the years, mortgage approval standards have become more uniform and strict, ensuring the overall quality of mortgages. The current quality of mortgages is better than 12 years ago. underwriting quality is stronger than it was a decade ago or 12 years ago 

Before becoming OSFI's leader, Peter worked in credit risk ratings in the United States. I had a personal interview in February this year, and this video can be found on YouTube. He believes that Greater Toronto will develop like New York and become a metropolis where everyone wants to live. In such a premier city, the standard residential property is a 700-foot condo. His supervisory principle is to ensure the safety of banks and at the same time prevent Canadians from pinning their hopes of buying a house on changing mortgage rules. He believes in the principle of free competition in the market for buying houses, but favors a certain group of people in mortgage policies.

This is a positive and optimistic article. I believe that Chinese editors don’t like this type of article, so they don’t know how to translate it. The Chinese community likes articles that disparage real estate. For example, today Fitch's article disparaging Canadian real estate was translated into Chinese.

Work experience

give quilt Tips from the Trigger family: Read letters from banks. Read the question, do you understand? Can you tell clearly which ones are optional and which ones are required? Explaining this problem again will drive me crazy. Inquiries on this subject will only be accepted from my own clients and not from others.

Suggestions for families moving to their own homes:We currently have a short-term promotion for 3-year fixed interest rates. It is recommended that families buying their own homes choose a 3-year fixed interest rate plus a HELOC.

Opportunities to add clicks: Three years ago, several large CONDO projects were handed over, such as The Britt. At that time, loans could only be made based on the original purchase price. Most borrowers chose three-year fixed interest rates that year, and a large number of loans will mature in March next year. This is a good time to make additional mortgages at market prices. Cash out for later use, or make a down payment to buy more properties.