Effective immediately, the Bank of Montreal will require all applicants in its new-to-Canada lending programs to include documents that verify their wealth and source of income when applying for a mortgage.
Bank of Nova Scotia made the same change to its policy last week amid widespread concern about overheated housing markets.
White Rock real estate lawyer Tejinder Dhillon is glad to hear that some Canadian banks are voluntarily tightening the rules on foreign buyers, but he'd like to see the federal government implement an across-the-board change.
"There's a program where immigrants in Canada less than five years have the ability to get a mortgage without qualifying for income verification," said Dhillon.
Initially, that program was implemented by the federal government to help newcomers without a Canadian credit history get into the market.
Dhillon believes it's a good program but feels it has been abused by wealthy foreign buyers and has "fuelled the speculative market that has caused prices to increase a tremendous amount over the last couple of years."
Bypassing income verification, he said, should only be allowed in cases where the purchase price is under a certain amount.
"It really should be for a true benefit for new immigrants who really can't afford it, not for those who are taking the advantage to buy a more expensive home and simply leverage their money," said Dhillon.
"It's a program that can still be used selectively, but it shouldn't be widespread. It should have a cap on it to make sure it's not used for three, four, five million dollar homes. That makes no sense."
"I really do believe it should be a government regulated change," said Dhillon.
Provincial government data shows foreign nationals invested more than $1 billion into B.C. property between June 10 and July 14, with more than 86% of that in the Lower Mainland.