If the federal government forces mortgage lenders to carry more of the risk for delinquencies it could have a negative impact on the housing market and lead to an increase in mortgage defaults.

A document obtained by the Canadian Press reveals that the Department of Finance believes risk-sharing could mean that lenders pull back on mortgage lending to riskier borrowers.

Fewer loans could mean a downturn in housing market activity and a decrease in prices, which could actually increase the risk of mortgage defaults.

No decision is expected on the proposals until later this year or 2018, as data and responses to a consultation process by the government need to be reviewed first.

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


More market watch: