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Stay Ahead of the Game: Understanding OSFI’s Proposed Changes for Mortgage Brokers

According to an article from the Financial Post, if you're in the market for a new home, you may want to pay attention to a new proposal by the Office of the Superintendent of Financial Institutions (OSFI), Canada's top bank regulator.

OSFI is currently seeking public input on whether to tighten "stress tests" imposed on home buyers.

For those who may not be familiar, stress tests are used to make sure that buyers can afford their mortgages even if interest rates go up in the future. In other words, it's a way to make sure that people who may not be able to afford their mortgages in the future, don't get approved for one today.

The current stress test, known as Guideline B-20, was introduced in 2012 and new thresholds were added in 2018. However, conditions in the Canadian residential mortgage market have shifted significantly since then, and OSFI believes that mortgage lending risks have increased considerably, particularly related to debt serviceability.

To mitigate these risks, OSFI is considering a set of proposed complementary debt serviceability measures, including:

  • Interest rate affordability stress tests

  • Loan-to-income and debt-to-income restrictions

  • Debt-service coverage restrictions

These measures, if implemented, would make it harder for some people to get approved for a mortgage. However, OSFI believes that these changes would help to reduce the risk of mortgage defaults in the future.

The public can give their input on these proposed changes until April 14, and OSFI will consider the feedback when making revisions to Guideline B-20. It is worth noting that any changes may not happen until later this year, to give the housing market time to adjust.

If you're in the market for a new home, it's important to keep an eye on these proposed changes and consider how they may affect your ability to get approved for a mortgage. It may be wise to start the process sooner rather than later to avoid any potential roadblocks down the line. It's always good to be prepared and informed.


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