Tag Archive: OSFI


The Mortgage Stress Test Changes

The Department of Finance today announced changes to Canada’s benchmark qualifying rate, a key component used in stress-testing insured mortgages. The new benchmark rate will come into effect on April 6, 2020. It means insured borrowers (including those buying with less than a 20% down payment) will have to prove they can afford a monthly payment based on a rate...

OSFI’s Mortgage Update Raises Questions

Don’t worry about the nagging side effects from the federal mortgage stress test. You might have heard about them in the media, but based on recent stats shared by the banking regulator, they’re overblown. Nothing to see here… Well, actually, there is more to see. OSFI’s latest assertions raise just as many questions as answers. Here were six points from its January...

The Mortgage Stress Test May Get More Reasonable

Here’s some good news for people who’ve been blocked from qualifying for a mortgage due to the government’s “stress test.” Canada’s banking regulator (OSFI) is taking a second look at the mortgage stress test calculation, which requires borrowers who are not default insured to prove they can afford a monthly payment at the greater of: (A)  Their actual mortgage rate...

We May Again See Mortgage Insurance for Properties Over $1 Million

In 2012, Canadians lost the ability to buy $1 million+ homes with less than 20% down. The Finance Department put the kibosh on it, in its hotly debated quest to “reduce taxpayer risk.” But now, there’s hope that well-qualified borrowers will once again be able to buy a 7-figure shack with just 10% down. Genworth Canada, the nation’s biggest private...

It’s Time to Rethink the Stress Test: CIBC

“You usually need to be in a recession to see household credit rising this slowly.”—Ben Tal, CIBC Here’s something everyone in the mortgage industry already knew, and CIBC just re-confirmed. The government’s mortgage stress tests have caused most of Canada’s lending slowdown since 2017. That’s the conclusion of CIBC Economics. As a result, the bank’s widely-respected econo-wizard Benjamin Tal concludes, “…Regulators should...

Ottawa’s Mortgage Stress Test. Who Do We Believe?

The two top policy-makers in Canada’s mortgage market don’t seem to be on the same page—at least not with what they’re feeding the public about the mortgage “stress test.” Observe these two statements about why the stress test—which is part of banking regulator OSFI’s contentious “Guideline B-20″—was implemented: Bill Morneau, Minister of Finance: “…We wanted to make sure that [home]...

New Regulation Could Boost Mortgage Rates

So many factors can cause you to pay a higher mortgage rate. One of the least transparent is government regulation. Since 2008, Ottawa has layered mortgage policy upon mortgage policy, thereby boosting lender funding costs an estimated 25-50+ basis points depending on lender and mortgage type. These changes include the removal of insurability on various loan types (default-insured mortgages are...

OSFI’s Stress Test, Part II – Sensible Fine-tuning

In a speech last week, Canada’s banking regulator brushed off the “unintended consequences” of its controversial mortgage stress test with one sententious comment: “…The answer to this important problem…cannot be more consumer debt, fuelled by lower underwriting standards.” — OSFI Assistant Superintendent Carolyn Rogers She could not have been more right. More slack in “underwriting standards” was the last thing...

OSFI’s Stress Test – How We Got Here – Part I

Never before has Canada’s banking regulator received so much pushback on a mortgage rule. OSFI has felt such heat from its controversial “B-20” stress test, that it’s started a campaign to defend its position—e.g., this speech last Tuesday (video) and this one last Thursday. From that and from what we know of regulators’ non-public comments, one thing appears clear. The government has...

Got a HELOC? Your Mortgage Options Are About to Shrink

For more than a year we’ve speculated that new rules will be adopted, making it tougher to qualify for a HELOC. How could they not? The Bank of Canada, OSFI, CMHC and FCAC have all been warning about HELOC risk for months. And when multiple government agencies target a financial product, change is a’comin. And now it’s here. Banks are...