TORONTO -- Policy-makers should take time to ensure there are no unintended consequences stemming from efforts to rein in Toronto's runaway housing prices before introducing further measures, the new CEO of the Canadian Bankers Association said Wednesday.
Neil Parmenter said he's encouraged that the federal, provincial and municipal levels of government are working together on housing policy. But he urged regulators and politicians to assess what effects recent rule changes are having before bringing in new policies.
"Sometimes it's healthy to have a bit of a pause and see what the impacts are and then adjust as necessary," Parmenter said in his first interview with a Canadian news organization since taking the helm of the association earlier this month.
The Ontario government announced a suite of regulations in April aimed at cooling the country's hottest housing market, including a 15 per cent tax on foreign speculators.
After reporting their latest quarterly results in recent days, several of the CEOs of Canada's biggest banks said they are seeing early signs of a slowdown in the Toronto real estate market.
"We want some time for these things to play out," Parmenter said. "Any time there's any change implemented there can be unintended consequences."
The health of the country's real estate market has become a topic of much discussion lately due to rapidly soaring prices in Toronto and Vancouver and record levels of household debt.
The liquidity crisis at mortgage lender Home Capital Group, which saw customers withdrawing their savings en masse in recent weeks, exacerbated those concerns.
"There isn't a bank that isn't watching the housing market quite closely and recent events have amplified some of that," Parmenter said.
He wouldn't comment on the Home Capital situation -- Home Bank, a subsidiary of the company, is a member of the Canadian Bankers Association -- but he did highlight the strength of the country's mortgage sector.
Canadian banks are conservative in their mortgage lending practices and the number of residential mortgages in arrears is very low, Parmenter said.
The latest data from the Canadian Bankers Association indicates that 0.28 per cent of mortgages were in arrears in February.
"All of the banks that are operating in Canada run very disciplined underwriting standards for the mortgage market, and they stress-test their books against a variety of economic changes, whether they be rising interest rates or changes in the unemployment rate," Parmenter said.
He also spoke about the need to regulate emerging financial technology, or so-called fintech startups, particularly when it comes to protecting customers' privacy and security.
Regulations are also needed to ensure liquidity, especially with regards to payments-based companies, Parmenter said.
"You want to know, if you are using a fintech provider to provide payments, that your money will be there and it's secure," Parmenter said.
There is a place in the financial services industry for fintech companies, which are good at resolving so-called "pain points" for customers, Parmenter said.
"What the industry is looking for is governance, rules and oversight that aren't necessarily the same as those governing banks, but provide a clear understanding of what all the rules are and who the regulators are," he said.
