One might ask why further restrictions for prime borrowers are required at all in a nation with historically (and consistently) low arrears rates. Mortgage arrears rates have come down from their ‘high’ of 0.43% in 2009 to a current 0.29%.
The answer is, in a word, Optics. There is an undeniable statistical link between the amount of equity homeowners have in a property and those same homeowners’ likelihood of falling into arrears or foreclosure. More equity = less risk. The optics of this change appear as good governing. This looks like an effort to moderate rapidly rising prices in the two largest markets (Toronto and Vancouver), and increase stability.
This regulatory change also has a net effect similar to a subtle increase in interest rates from the Bank of Canada. More restrictive lending guidelines are far more targeted than the Bank of Canada moving interest rates, which affect the entire economy, not just real estate.
Moving interest rates is simply too big a macro-economic lever to lean on in an effort to slow, or lower, home prices in just two cities of the nation.