The federal government has tabled a bill Thursday to provide the Office of the Superintendent of Financial Institutions (OSFI) oversight of the Canada Mortgage and Housing Corporation (CMHC). The amount of lending that CMHC insures has tripled from $200 billion in 2000, to $541 billion in September of 2011. OSFI’s oversight should have a dampening effect on the housing market, as more mortgage applications will be scrutinized going forward.
Finance Minister Jim Flaherty said that he’s particularly concerned about the condo markets in Toronto, Vancouver, and Montreal. The bill that is tabled is specifically aimed at discouraging high-risk borrowing, and reducing the risk to taxpayers if certain markets collapse.
Earlier this week, the govenor of the Bank of Canada warned that as interest rates rise, household debt remains a significant risk to Canada’s economic health. At the moment, house-price-to-income-level is 35 percent above historic levels.