John Greenwood 

Canada’s banking regulator is increasing its scrutiny of loans made to consumers especially mortgages.

Amid rising concern about the high level of household debt, the Office of the Superintendent of Financial Institutions is “stepping in to increase (its) monitoring” of consumer loans made by the major banks, said the head of the organization.

Speaking to reporters in Toronto, Julie Dickson said recent moves by the government to tighten mortgage rules had a positive impact and that insured consumer home loans are not growing as fast as they were. However, Ms. Dickson said lenders also need to keep an eye on their uninsured mortgages.

She made the comments following a speech to business leaders on the lasting impact of the financial crisis on the financial system.

Ms. Dickson also said that in the face of intense competition in the financial sector there is concern that banks may lower their lending standards. She said OSFI is looking at the issue.

Regarding OFSI’s participation in the international effort to beef up financial regulations she said there will likely be a decision to publish a list of so-called too-big-to-fail banks later this year, but that no Canadian banks are likely to make the cut.

Currently there are 28 institutions being considered “but the list is not static,” she said.