banks take more responsibility for improving Canadians’ ability to manage and repay debt, while also suggesting the federal government introduce more stringent standards for mortgage qualification.
Action Canada’s Task Force on Household Debt, which has been meeting for the past six months, released its report entitled “Debt Crunch: Policy Recommendations for Addressing Canada’s Record Level of Household Debt”, which called on the government along with Canada’s banks and financial institutions to implement a Code of Conduct on Lending (CCL) to “promote standards that would decrease borrowers’ financial vulnerability associated with high levels of household debt and ensure they understand the potential risks associated with mortgage and consumer debt.”
Derek Dunfield, from MIT’s Sloan School of Management and a member of the task force, suggested Canada could be in for a reckoning, and argued banks needed to play a more active role in discouraging Canadians not to borrow more than they can afford.
The report referred to the “culture of borrowing” in Canada, which presents two possible problems for the economy. If interest rates rise and housing prices drop, more people could begin to default on their mortgage and credit card payments, Dunfield said.
Click here to read more from Mortgagebrokernews.ca.