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.
Devil in the details of Canadian model
MFAA blasts major bank dominance