Canadian banks are blamed for creating oligopoly

A new book The GTA Affordable Home Ownership Crisis by R. Scott Davie points to B-20 rules as a horrible example of Canadians suffering from the impact of limited competition, caused by the Office of the Superintendent of Financial Institutions.

According to the owner of Davie Real Estate, who has been selling homes in the area for decades, OSFI and federal officials are the ones to blame in the hit on the market, even though it’s an unofficial government agency. In addition to it, Davie also offers a solution for Canadians, who strive to become homeowners but face new challenges from OSFI-introduced B-20.

“We have Canadian banks in the American market, but we don’t have any American banks in Canada,” - noted Davie. “We should have limited American banks for the Canadians to take advantage of it and not to remain tied to the local banks”.

“In my opinion, the Ontario government should attract a few American banks and register them provincially, so OSFI’s rules don’t apply to them. They will pick up the business Canadian banks are ignoring only to keep the mortgage markets balanced.”

According to Davie, homeowners are also not in a great position, as switching lenders will result in a 2% stress test. In other words, banks now don’t have a reason to provide competitive rates.

An expert Calam Ross shares the idea of bringing American banks to Ontario’s market, saying Canadian banks are an oligopoly.

“Our banks’ power over the market is extremely strong. The Canadian banking is seen at the global arena as something with a license to print money. If you look at the Big Six, you’ll see they divide everything: from back room operations to commonality of credit rules,” - explained Ross. “Compare this with the definition of ‘oligopoly’ and you won’t be able to say we have enough variety and competition."