VANCOUVER — Canada's bank regulator is warning lenders not to become complacent about the way they underwrite mortgages, reminding them that low interest rates and rising property values aren't guaranteed.
Jeremy Rudin of the Office of the Superintendent of Financial Institutions Canada says in the prepared text of a speech for a meeting of mortgage professionals in Vancouver today that prudent lending practices have never been more important.
Rudin's speech touched on advice the regulator issued earlier this year on the industry's practices, including verifying borrower income levels, managing higher-risk loans and ensuring adequate debt service ratios.
He says the sound underwriting of mortgages relies on having reliable information about the borrower and the property that's being purchased.
Rudin says the current economic environment is behind the office's focus on underwriting practices, noting the Bank of Canada's concerns about increases in household borrowing and mortgage debt, in particular.
The superintendent's office supervises lenders that account for nearly 80 per cent of all Canadian mortgages.
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