Canadians may scrap mortgage model

by Adam Smith15 Jun 2012

The Canadian mortgage bond model touted by the MFAA may be headed for the scrap bin.

MFAA chief executive Phil Naylor has championed the Canadian securitisation model, saying it will open up funding to smaller lenders and increase competition. But Canadian Finance Minister Jim Flaherty has hinted that the government may look to scrap some its involvement in the mortgage sector.

"I think there is a role to regulate but whether we, the Canadian people, have to be the owners and shareholders of a financial institution to do this is a question. Over time, I don't think it's essential that a government financial institution provide mortgage insurance in Canada," Flaherty said.

Flaherty also confirmed he would not increase the Canadian Mortgage and Housing Corporation's insurance funding.

Naylor has previously argued that the adoption of a system like Canada's securitisation model could create a strong and viable non-bank lending sector.

“We need to adopt initiatives similar to those taken by the Canadian Government to successfully stimulate competition in the banking sector to the benefit of borrowers and the wider economy," he said.

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  • by Wes 15/06/2012 10:27:58 AM

    I'm unsure why there have been a couple of articles out discrediting the CMB model. The issue isn't about directly supplanting the Canadian model, it is about stimulating competition through a regenerated securitisation system in Australia. 5th pillar isn't going to work, the CUs and building societies are getting some traction through deposits but there needs to be more funds in the market so that creative and sharp new lenders can set the scene for a new era in competition. The detail can be worked out. lets just get started on developing a model which does work in the Australian environment.

  • by ozboy 15/06/2012 11:10:45 AM

    Poor Mr Naylor every time he opens his mouth he has to back track. Silence can be your friend.

  • by Anonymous 15/06/2012 1:13:44 PM

    Ok, so Phil Naylor CEO of the MFAA has gone gone and on about how great this mortgage model is and how our government should incorporate it, but the Canadian government is withdrawing it's involvement? Does Phil know what he is talking about? Better question, should he really be running the Mortgage Finance Association of Australia if he doesn't know what he is talking about?