The Office of the Superintendent of Financial Institutions (OSFI) recently announced the possibility of stricter underwriting rules in response to what it says are building risks in Canada’s residential mortgage market.

Canada’s banking regulator is concerned about financial institutions being exposed to such risks as a potential recession and the large and rising number of highly indebted borrowers, especially those with variable rate mortgages.

To mitigate these risks, OSFI is proposing the following three restrictions:

1. Loan-to-income and debt-to-income restrictions

2. Debt service ratio restrictions (GDS/TDS)

3. New interest rate for stress test

WHAT BORROWERS WOULD BE IMPACTED?

These proposed measures target conventional mortgages (those with down payments above 20%), which are more commonly available from the big banks.

None of the proposed changes will be finalized until after OSFI’s public consultation period, which is now open until April 14, 2023. To prepare for these changes and how they may impact your future purchase, let’s talk!