TD CEO believes Canada shouldn’t hurry with cooling down the housing market

TD Bank’s CEO Bharat Masrani doesn’t think Canada should hurry with introducing measures aimed at cooling down the national real estate market, as many factors supporting the prices increase are related to the pandemic and may ease when the crisis weakens.

During the previous year, the prices growth in many Canadian markets have been pushed up by buyers looking for larger properties they could use for different activities over lockdowns and working from home. The remote work trend allowed Canadians to leave large cities, while government stimulus programs combined with a lack of spending opportunities have led to larger savings. In addition to it, the extremely low interest rates reducing payments on bigger mortgages were a response to the crisis and no one knows how long it will last, Masrani said.

Although Canada has had a long period of fighting with imbalance between housing supply and demand, Masrani says policymakers need to study how long many of the recent drivers of the price increases will last before taking any measures.

“We shouldn’t just react spontaneously,” – Masrani noted. “There are certain tools that have been already used before, and they have worked quite well. So I believe they are studying the data to see what is permanent and what is not, and then they will choose the right policy measures that have already been proven.”

According to Masrani, TD Bank is very comfortable with its underwriting standards and how it approves its mortgages. Some people may even call the Bank too conservative when it comes to risk management. At the end of its fiscal first quarter, TD Bank had almost $212.5 billion in residential mortgages, which is 6.2% more than a year earlier.

“We use many stress tests,” – Masrani noted. “We feel comfortable that the state we’re in is appropriate for the strategy that TD is using.”