BMO Financial Group says recent changes to mortgage stress test rules and the cooling of prices and sales in some regions may moderate the country’s housing market.
“We can assume, just given what we’re seeing right now in housing prices and sales, that there will be some moderation,” Erminia Johannson, BMO’s group head of North American personal and business banking told analysts on Wednesday.
“But it will still remain a fairly robust mortgage market in Canada, for sure, over the next little while.”
Johannson made the comments as BMO beat expectations, reporting its second-quarter profit nearly doubled compared with a year ago when the amount it set aside for bad loans soared at the start of the pandemic.
The new mortgage stress rules come into effect on June 1. They will set the qualifying rate on uninsured mortgages at either two percentage points above the contract rate, or 5.25 per cent, whichever is greater.
The change is aimed at taking...