Remarks by Superintendent Routledge at the House of Commons Standing Committee on Finance, January 21, 2022

Speech -

Good Morning Mr. Chair and committee members.

Thank you for the opportunity to answer the Committee’s questions today. I intend to be brief as I suspect that you will all have questions for me.

I would like to acknowledge that I am speaking from the traditional unceded territory of the Anishnaabeg nation. I am grateful to have the opportunity to be present in this territory. I recognize that those joining us today may work in different traditional Indigenous territory.

Created in 1987 in response to a period of financial system volatility, the Office of the Superintendent of Financial Institutions’ (OSFI’s) purpose is to ensure that financial institutions and pension plans are regulated by an office of the Government of Canada so as to contribute to public confidence in the Canadian financial system.

We pursue that purpose by supervising financial institutions to ensure their Boards of Directors and senior managers keep their institutions in sound financial condition and adopt smart, forward-looking policies to manage risk. We also evaluate system-wide risks that could impair the soundness of financial institutions.

The risks within Canadian housing finance requires that systemic view and I commend the committee’s timely motion to study the interrelated topics of inflation and housing finance.

While affordability and sustainability of housing in Canada are issues that touch all Canadians, OSFI’s role centres on preserving and protecting the availability and quality of credit that sustains the housing market. A stable housing finance system – with reliably available credit at prudent, risk-based prices – is a pre-requisite for a healthy housing market in our judgment.

At OSFI, we have focused intently on the risks in housing finance every day since the global financial crisis. In that time, OSFI and our federal regulatory partners have consistently taken regulatory actions to add more discipline and reduce unproductive exuberance in the housing finance system (over 25 significant federal actions by my count). And we will never let down our guard. In fact, we constantly challenge ourselves to foresee housing market risks beyond the horizon and adapt early to them.

That is our aim in this regard – a stable housing finance system that helps every Canadian to have a home they need at an affordable price. Our strategy is to ensure the housing finance system and the Canadian financial system have sufficient buffers to absorb the inevitable uncertainty and volatility one finds in capital asset markets such as housing.

With respect to housing finance, we have multiple buffers in the housing finance system and one will find them at the individual level, the institution level, and the systemic level. I look forward to expanding on this strategy when answering your questions.

Because having appropriate buffers in place mitigates risk for both lenders and borrowers, our strategy makes sense in good times and bad. And our strategy is particularly constructive during periods of elevated uncertainty.

The very substantial increase in house prices, since the pandemic recovery began, adds to the uncertainty in our housing finance system and marks a sound rationale for discussing related issues here today, but at OSFI we are ready and willing to take early, risk-based decisions in response to that uncertainty and in pursuit of our overarching aim.

I look forward to contributing to the Committee’s study and to answering the members’ questions.


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