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Federal financial regulators’ recent pushback on criticism of tougher mortgage underwriting rules is a positive for the Canadian banks, says Moody’s Investors Service in a new report.

Earlier this week, the Office of the Superintendent of Financial Institutions (OSFI) published a report detailing the efficacy of its revised mortgage underwriting rules, including the new borrower stress testing requirements.

Among other things, the report found that the proportion of highly leveraged borrowers has declined, reducing risks to the banks; that renewal rates have not been negatively impacted; and that borrowers aren’t taking longer mortgages in order to pass the stress test.

Moody’s said that OSFI’s report is positive “because it reaffirms the regulator’s commitment” to the tougher standards, pushing back against industry pressure to relax its requirements.

“In publishing this report, OSFI indicates that the guideline is working as intended because the proportion of new, highly indebted mortgage borrowers has fallen. As such, we do not anticipate that OSFI will relax these rules in the near future,” it said.

The rating agency also indicated that the curbing of highly leveraged mortgage borrowers “has been a significant contributing factor in tempering consumer debt-to-income levels and price increases in Canadian housing markets with evidence of significant speculation.”