Finance Minister ‘pleased’ by banks’ restrictions on foreign home buyers

Finance Minister Bill Morneau said he's pleased to see that some Canadian banks are tightening lending restrictions on foreign buyers.

The Globe and Mail reported Monday that Bank of Nova Scotia and Bank of Montreal have both updated their rules in recent days in ways that will require non-residents to provide extra documentation about their wealth and income when applying for a mortgage.

"We're pleased to see that they are taking a look at the risks that they have in the market and taking action that they think is appropriate," Mr. Morneau told reporters Monday as he launched pre-budget consultations.

Housing has emerged as a major preoccupation of the federal government as policy makers attempt to gain a better understanding of the factors that have led to sharp price increases in certain markets in recent years. The issue is of particular concern in the Vancouver and Toronto housing markets.

In June, Mr. Morneau announced the creation of a federal, provincial and municipal working group on housing that has held regular discussions since.

"We expect banks to appropriately manage their risks and come up with underwriting standards that make sense in this market," he said, noting that each level of government is examining what could be done under its jurisdiction. "Our efforts are to look at the federal government tools and we will continue to do that as we focus on how we can manage in an appropriate way the investment that for most Canadians is their largest single investment, which is their house."

Mr. Morneau declined to say whether his fall economic update would include new policy measures. He said he will be meeting with private sector economists on Oct. 13 to receive their latest thoughts and forecasts for the Canadian economy.

In launching the government's pre-budget consultations, Mr. Morneau said his message for Canadians is to "think big" and to "be bold."

So far this year, the Canadian economy has underperformed the expectations of economists who provided forecasts for Mr. Morneau's first budget in March. Mr. Morneau said that fact justified his government's decision to budget $6-billion a year in prudence in the event of weak growth.