The ratings agency says that the banking system is still vulnerable to “a growing tail risk of a sharp correction in the housing market” and that the tightened underwriting should lead to more conservative decisions and will be “constructive for the banking industry by further supporting the long-term sustainability of Canada’s residential real estate market.”
Fitch notes that some borrowers may be tempted towards riskier lenders but expects that overall the rule changes will cool the market, a “positive development” in the overvalued market, especially in Toronto and Vancouver.
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate
The changes to OSFI’s B-20 guideline which will tighten mortgage lending criteria from January has not been widely welcomed, but Fitch says it’s a good thing.