New housing rules imposed by the federal authorities will lead to higher mortgage rates, hurt small real estate markets and drive borrowers toward unregulated lenders, claim banks and mortgage insurers of Canada, Bloomberg reports.
In this connection, the largest mortgage insurers intend to lobby the risk sharing proposal obliging the industry to share a burden of mortgage defaults. Risk sharing implies that lenders pay a deductible in case a loan increases, say sources close to the situation. Apart from that, the insurers will lobby risk-sharing measures implying banks paying a fee to insurers to make up for the loss.
At the same time, Canadian banks disagree and claim that mortgage defaults are too insignificant.