The Office of the Superintendent of Financial Institutions (OSFI) has defended tougher mortgage rules that have been blamed for a plunge in the housing market, but it’s not closing the door on the possibility that regulations could ease if conditions change, according to a Bloomberg report.
Carolyn Rogers, assistant superintendent at OSFI, said the tougher mortgage rules remain a “prudent” way to guard against risks in the marketplace, but OSFI is continually assessing conditions.
“OSFI monitors the environment on a continual basis, and when we determine that adjustments to our standards and guidelines are warranted, we make them,” Rogers said in a speech in Toronto on Tuesday.
OSFI has been facing pressures to ease its mortgage stress test, which it introduced in January of last year.
While interest rates have soared since the stress test was introduced, Rogers said that borrowing costs still remain historically low and personal debts remain high. There could also be changes to income or other homeownership costs that make paying off mortgages difficult.
“It’s prudent to have a buffer for these changes as well,” Rogers said.
In addition, the introduction of the stress test itself was an adjustment to a “shift in risks” in the financial system – and things could change.
“Should that margin of safety be monitored, and should changes be considered if conditions in the environment change? Of course, they should,” Rogers said.