The Globe and Mail reports in its Monday edition that the housing market is on fire again. The Globe's Rita Trichur writes that last spring, there were fears that housing prices would crash, but now they are climbing too high. Although the Office of the Superintendent of Financial Institutions is proposing stricter mortgage rules, Ms. Trichur says it is obvious that more needs to be done to cool the market. She says the OSFI's proposal, which involves a tougher stress test for uninsured mortgages beginning June 1, is a start. Ms. Trichur says the OSFI is right to set a higher bar for home buyers. She says if Ottawa is serious about curbing excess in the housing market, then it should also force banks and other lenders to shoulder their fair share of risk for insured home loans.
Specifically, Ms. Trichur says it is time for the federal government to revisit the idea that mortgage insurance, which is ultimately backstopped by taxpayers. Ms. Trichur says mortgage insurance should not give lenders blanket protection when consumers default on insured mortgages. Insured mortgages are virtually risk-free for lenders because they incur only minor costs for defaulted loans. The Globe says banks need to shoulder more risk.
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