The Globe and Mail reports in its Tuesday edition that Home Capital Group ($22.08) is up more than 50 per cent since Berkshire Hathaway's Warren Buffett sold his interest in December.
The Globe's David Berman writes that Mr. Buffett left $88-million on the table by selling too soon. Mr. Berman says Home Capital's stunning comeback over the past six months raises questions about whether recent regulatory changes to Canada's housing market are benefiting some of the smaller players at the expense of Canada's Big Six banks.
Home Capital chief executive officer Yousry Bissada says, "We believe we are seeing high-quality borrowers coming to us that would have qualified for the big banks in the past but no longer qualify under tighter lending regulations."
Faced with steeply rising home prices in key markets of Vancouver and Toronto, regulators imposed stringent lending requirements on uninsured mortgages, starting in 2018. These changes are now being blamed for working: The housing market is off its boil.
What is more, traditional banks are reporting abnormally slow mortgage growth. Growth slowed to just 2.3 per cent, year-over-year, in the big banks' fiscal second quarter and touched a 17-year low in December.
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