The government’s new mortgage rules are “credit positive for Canada’s banking system,” says ratings agency, Moody’s.
The banks wouldn’t have campaigned for these rules if they weren’t credit positive.
We’ve covered this angle already, however, so we won’t rehash it.
Moody’s did add one other interesting note. It said: “One potential unintended consequence of tighter mortgage rules would be Canadian consumers continuing to increase their overall leverage through other means, including unsecured lines of credit.”
That’s a given in our view, and those with conspiracy theories hold that this was not an “unintended consequence.”
Banks have monstrous unsecured lending portfolios, and they knew these rules could benefit those portfolios. In fact, every last outcome of these rules was calculated in advance by TD, BMO and the other banks promoting these changes.
What’s not as clear is to what extent policy-makers considered the side-effects of these regulations.