Low rates leave policymakers with tough choices as pandemic housing boom rages fortmcmurraytoday.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from fortmcmurraytoday.com Daily Mail and Mail on Sunday newspapers.
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Mark Blinch/The Globe and Mail
Canada’s bank regulator said it will take another crack at changing the mortgage stress test that determines whether borrowers qualify for a home loan.
The Office of the Superintendent of Financial Institutions (OSFI) said it will issue a “new consultation” on Thursday, as economists and some bank chief executives call on policy makers to deal with runaway housing prices.
OSFI proposes tighter mortgage rules amid very strong forces bnnbloomberg.ca - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from bnnbloomberg.ca Daily Mail and Mail on Sunday newspapers.
Posted: Apr 08, 2021 3:13 PM ET | Last Updated: April 8
Canada s top banking regulator is raising the mortgage stress test level to 5.25 per cent or two percentage points above the market rate, whichever is higher.(Ron Antonelli/Bloomberg)
Canada s top banking regulator is proposing to raise the mortgage stress test level to 5.25 per cent or two percentage points above the market rate, whichever is higher.
That s a hike from 4.79 per cent, which is the current average posted rate at Canada s biggest lenders.
Thursday s change by the Office of the Superintendent of Financial Institutions (OSFI) means borrowers will need to prove that their finances can pay for the loan at that higher rate, regardless of what a lender is willing to lend them. This would make it harder to qualify for a home loan, shrinking the pool of qualified borrowers and ultimately bringing down some of the upward pressure on house prices in the country.
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TORONTO (Reuters) - Canada’s financial regulator, which has been planning changes in its four-year-old mortgage stress test, on Thursday proposed making it tighter, following concerns that the initial measures could further stimulate the red-hot housing market.
The Office of the Superintendent of Financial Institutions (OSFI) is proposing that the new benchmark to determine the minimum qualifying rate for uninsured borrowers would be either the greater of a range of rates submitted by lenders plus 200 basis points or 5.25%, according to a letter to lenders.
It is broadly an increase from the initial plan announced in February 2020, which was shelved a month later as the coronavirus pandemic took front seat. That proposed the weekly median five-year fixed insured rate, calculated from mortgage insurance applications, as the benchmark, which stakeholders said would be “highly volatile.”