Banks and Mortgages

Let's see ....the banks are asking the Governor of the Bank of Canada and the Minister of Finance to tighten up mortage rules in Canada.

As I heard this morning on our local CBC station, there seems to be a question of 'responsibility' (my term). Mortgages are fully secured by property...and insured to boot. If a borrower defaults the lender can rely on insurance. They can also foreclose on the property.

The banks believe our mortgage rules are too easy....yet who decides on mortgage approval. Of course the banks themselves do it. Anyone who has tried to obtain a mortgage knows the lenders are the ones to 'approve' the mortgage.

So if our mortgage rules are too easy why cannot a lender simply apply a less easy rule.. oh of course, in a competitive economy (which we are supposed to have) that might mean a bank that applied a tougher standard would lose business.

Using this argument suggests the motivation behind the banks' wishes is not some altruistic concern about public welfare. They seem to not want to be unpopular with prospective borrowers. They want the government to 'toughen' up mortgage lending rules so when prospective borrowers complain, they, the banks can always blame the 'government'.

They invariably want their cake and eat it too.. so it seems....