Banking watchdog backs off its get-tough approach to mortgage lending

Home equity lines of credit will be restricted to 65% of a homeowners equity, but the Office of the Superintendent of Financial Institutions has backed down on insisting banks do a credit check when we renew our mortgages.

Here’s the article from today’s Star, by Susan Pigg:

Ottawa’s banking watchdog has backed down on one of its toughest proposals for reining in household debt — making sure that Canadians’ credit risk is evaluated every time they renew their mortgages.

In an unusual “interim update” of tighter lending guidelines it hopes to issue this summer, the Office of the Superintendent of Financial Institutions says it now agrees that “having a good payment record is one of the best indicators of credit worthiness.”

Instead of renewal reviews, federally-regulated banks and financial institutions will be expected to “periodically” evaluate the credit risk of their customers, OSFI says in a seven-point clarification of new guidelines around lending rules it will make public this summer.

Click here for the full article