Real Estate

Government considers easing stress test

  • Last Updated:
  • Feb 7th, 2019 8:44 am
17 replies
Jr. Member
Jan 8, 2011
121 posts
74 upvotes
Ottawa
Kind of a misleading headline - the article specifically says that the regulator is not considering making changes to the stress test. Hopefully the industry lobbying will eventually change the government's mind.
Member
Jul 25, 2008
393 posts
268 upvotes
ottawa
yeah, the article basically states the opposite of the headline, in governmentspeak.

look at what she said:
“We’re always watching,” Rogers said in an interview. “If we see a material change in the risk environment, we’ll respond to that with changes to our policy.”

“We don’t look at this, necessarily, in terms of length of time, but what are the conditions? What’s the risk environment? That will be what prompts us to make changes to B-20,” she said.

“It’s one thing to put a guideline out, it’s another for the banks to make the changes they need to implement that guideline,” she said.

“It’s prudent, no matter what the interest rate environment is and no matter what the economic conditions are, that you have a little bit of breathing room,” she said.
that makes it sound like the only thing that would make OSFI reconsider is some other material restriction in risk equivalent to the restriction caused by the stress-test. The last quote makes it sound like they see this as permanent.
Deal Fanatic
Feb 29, 2008
9294 posts
4398 upvotes
Of course she's going to say that. How weak would she look if she crumbled now? Libs are on a one way ticket outta here with the stress test crap. Just like the idiotic rental cap.
Deal Guru
User avatar
Aug 2, 2010
14963 posts
4541 upvotes
Here 'n There
Need to make the test harder not easier.
Einstein: Imagination is more important than knowledge.

Economists have predicted 18 of the last 4 recessions

S&P500 Annual Returns (not inflation adj'd, divs reinvested) by Yr/%: 5/11.29, 10/13.31, 15/8.89, 20/6.06, 30/9.90, 40/11.69, 50/10.5
Sr. Member
Aug 3, 2006
623 posts
404 upvotes
Forget easing the stress test, there are reports that they want to extend the stress test to credit unions as well.
Deal Fanatic
Feb 29, 2008
9294 posts
4398 upvotes
datoprookie wrote: Forget easing the stress test, there are reports that they want to extend the stress test to credit unions as well.
I’m not surprised by this. It will be so easy to run against the libs. They’re done.
Deal Guru
User avatar
Aug 2, 2010
14963 posts
4541 upvotes
Here 'n There
Love the Libs. The Cons were a nightmare. Worse than Trump. Thank God they're gone.
Einstein: Imagination is more important than knowledge.

Economists have predicted 18 of the last 4 recessions

S&P500 Annual Returns (not inflation adj'd, divs reinvested) by Yr/%: 5/11.29, 10/13.31, 15/8.89, 20/6.06, 30/9.90, 40/11.69, 50/10.5
Member
Jul 25, 2008
393 posts
268 upvotes
ottawa
real OSFI news from that same interview - they're looking at forcing banks to treat riskier sources of deposits as more risky, which would ultimately lead to less competition, restricted lending, but also might incentivize banks to do better compliance work.
The new rules focus on the way banks calculate how much cash they must keep on hand as a safety net. The regulator sets what it calls “run-off rates” to estimate potential withdrawals and renewals in times of stress, which in turn determine minimum liquid assets banks must set aside. Deposits that are considered more stable have low run-off rates of 3 to 5 per cent.

For less stable deposits, such as those sourced through third-party brokers, the current run-off rate is 10 per cent. But OSFI’s proposed changes would raise that rate to 40 per cent, forcing banks to keep more deposits on hand, leaving them with less cash available to lend or invest at a profit, which could also impact margins and return on equity. And the revised rules would also create a new 20-per-cent run-off rate for any deposits sourced through the internet.

“Banks get deposits from different channels now than they traditionally did, right? And so we’re thinking about whether the nature of where those deposits originated affect how ... sticky they are, how likely they are to stay in times of stress," said OSFI assistant superintendent Carolyn Rogers, in an interview about OSFI’s proposals on Tuesday, prior to the release of National Bank’s report.
the immediate effect would be on lenders stocks - and the article mentions equitable and homcapital felt it today.

I don't know if there's time before election mode for the current government to approve changes.
Member
Oct 16, 2010
309 posts
161 upvotes
Toronto
JayLove06 wrote: Of course she's going to say that. How weak would she look if she crumbled now? Libs are on a one way ticket outta here with the stress test crap. Just like the idiotic rental cap.
I'm no liberal, but do you actually think OSFI is an arm of the liberal government and is subject to the whims of Trudeau?

The liberals don't like or want the stress tests. Just as any government in power doesn't like a hawkish central bank.
Deal Addict
Aug 21, 2007
4555 posts
396 upvotes
Lovely. Hey look, over inflated market is falling apart. Let us prop up over inflated market.

I hope the housing in Toronto and Vancouver tank and all those equity rich people wtih HELOC's get soaked. Maybe they can google how things played out in the early 90s.
Sr. Member
Dec 30, 2012
984 posts
1037 upvotes
Toronto
eonibm wrote: Love the Libs. The Cons were a nightmare. Worse than Trump. Thank God they're gone.
You're a fan of open borders and mass immigration? Biggest issue of our time and the Libs are on the wrong side of it.
Member
Jul 25, 2008
393 posts
268 upvotes
ottawa
civiclease wrote: You're a fan of open borders and mass immigration? Biggest issue of our time and the Libs are on the wrong side of it.
I really have no idea how we got here when four years ago all three parties were tripping all over themselves promising increases in immigration and refugee sponsorship.

For the purposes of this thread, I'll say a restrictive immigration policy at this time would exasperate pretty much all the problems in the property market leading to asset price declines, rental price declines, transaction volume declines, equity (banks) market declines, and material, labor, and regulatory cost increases. I cannot imagine a more effective way for the Federal government to tank the economy and property markets than a restrictive immigration policy at this time.
Member
Oct 16, 2010
309 posts
161 upvotes
Toronto
civiclease wrote: You're a fan of open borders and mass immigration? Biggest issue of our time and the Libs are on the wrong side of it.
So the biggest issue is not our deficit or record household debt, but perhaps the only factor that has been propping up our economy and society the past couple of years?
Deal Addict
Jul 3, 2007
1738 posts
1769 upvotes
Toronto
even if they "ease" it, its not going back to pre-2017 borrowing rules....not even close....and rates are higher now too...

Top