Bank regulators take aim at Condo Market

condoThe Globe and Mail today reported that Canada’s banking regulators are worried that real estate investors are getting over-exposed in the condo market in Toronto and Vancouver. They are looking at lending practices, concerned that long-term home equity lines of credit used to finance investment property purchases are reaching the point where consumers may not be able to meet their monthly interest payments or even repay the loan over time.

The report said that the analysis of condo markets in these two cities does not capture the degree of speculation. The Office of the Superintendent of Financial Services wants to take a closer look at the financial “stress tests” banks are doing in relation to credit lines.

With mortgage rates at historic lows, our federal regulators are doing what they can to tighten lending practices. Last week, we heard of rules affecting self employed individuals and condo purchasers ability to qualify for mortgages.

 

Related: Does it make sense to buy a reconstruction condo in KW?

Yesterday on our facebook page I posted a story from the Financial Post: That Condo might not be such a good investment.

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