Lending Rules Getting Tighter

As you may know, the lending rules have been getting increasingly tighter making it harder for people to qualify for mortgages but up until now, the rules have been predominantly geared to those with less than 20% equity in their homes.

Sadly there are new changes proposed which will affect those with more than 20% equity. This coupled with raising interest rates means those who are sitting on the fence on making a move with their financing may want to act quickly.

What You Need To Know

The Office of the Superintendent of Financial Institutions (OSFI) released draft changes to Guideline B-20 for public consultation. The B-20 Guideline establishes OSFI’s expectations for prudent residential mortgage underwriting and is applicable to all federally regulated financial institutions.
OSFI is proposing changes that align with their July 16 letter and strengthen the expectations they have in a number of specific areas including:
• Requiring a stress test for all uninsured mortgages of at least 2% above the contract rate
• Requiring that LTV measurements remain dynamic and adjust for local market conditions where they are used as a risk control, such as for qualifying borrowers
• Expressly prohibiting co-lending arrangements that are designed, or appear to be designed to circumvent regulatory requirements
• The deadline for a response from the Mortgage Professionals Canada association is August 17, 2017 therefore we hope that the above concerns are addressed and not implemented.

As always, if you have questions or concerns, feel free to contact me anytime!

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