TORONTO — A top Canadian financial regulatory official Monday warned the country's banks and other financial institutions against lowering interest rates further to spur additional borrowing by consumers.
In prepared remarks ahead of a speech here, Julie Dickson, head of Canada's Office of the Superintendent of Financial Institutions, said "curent levels of interest rates have already made borrowing extremely attractive to all borrowers."
She warned that financial institutions "should guard against loosening historical underwriting standards" such as adopting higher loan-to-value ratios or waiving any due diligence requirements.
Dickson compared the post-financial crisis environment, where consumers, firms and governments are struggling to pay off their debt loads, to a severe concussion.
It will have "lasting effects and there is no quick fix," she said. "Everywhere economic expectations must be adjusted to reflect the new reality of slower growth, tighter government spending as a result of sovereign debt levels and constrained consumer spending."
OSFI, an agency of the government of Canada, supervises federally regulated deposit-taking institutions, insurance companies, and federally regulated private pension plans.
