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Nothing To See Here Folks, RBC Says On Stricter Canadian Mortgages

Nothing to See Here Folks, RBC Says on Stricter Canadian Mortgages

By Doug Alexander for Bloomberg

Strict new mortgage rules that have helped send Canadian home sales to a five-year low are little more than a flesh wound, according to Royal Bank of Canada.

“We had never really believed that this would be a significant impact on our mortgage business,” Neil McLaughlin, head of Canadian banking at the country’s second-biggest bank said Thursday on an earnings call. “We’re seeing minor skew to the portfolio, but nothing significant.”

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McLaughlin reiterated Royal Bank’s earlier guidance of targeting “mid single-digit” mortgage growth even with a housing slowdown and implementation of tougher mortgage qualifying rules by regulators in January. The measures, known as B-20, require borrowers to qualify at the greater of the Bank of Canada’s five-year benchmark rate or 2 percentage points higher than a bank’s offered mortgage rate. The Bank of Canada rate has jumped 35 basis points this year, to 5.34 percent.

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