Lending standards may already be too tight, debt ratios dropping: CAAMP

Canada's mortgage industry association says mortgage qualification standards introduced last April have worked to reduce Canadian debt, which now surpasses $1 trillion.

A report by the Canadian Association of Accredited Mortgage Professionals says the new standards have disqualified more potential borrowers that would have otherwise entered the market.

Those standards increased the interest rate threshold used to qualify for variable mortgages.

CAAMP says that had the effect of edging down Canadians' housing debt ratios to 28.2 per cent in the second half of the year from 28.9 per cent for the full year.

It says the amount of outstanding mortgage debt in Canada surpassed $1 trillion in August and stood at $1.08 trillion in October, about 57 per cent higher than five years earlier.

The federal government has announced further changes to mortgages in an effort to clamp down on borrowing, but CAAMP says the move may be unnecessary because the April changes are already having an effect.