UPDATE 2-Canada proposes tighter mortgage stress test as home prices surge Reuters 2 days ago
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By Nichola Saminather
TORONTO, April 8 (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.
Canada restarts consultation on change to mortgage stress test benchmark Reuters 5 hrs ago
TORONTO, April 8 (Reuters) - Canada s financial regulator on Thursday proposed a change to a four-year-old financial stress test that would alter the benchmark used to set the minimum qualifying rate, restarting a consultation that it shelved over a year ago.
The Office of the Superintendent of Financial Institutions proposed a fixed rate of 5.25%, replacing the originally planned benchmark of the weekly median five-year fixed insured rate calculated from mortgage insurance applications, which stakeholders said would be highly volatile, it said in a letter sent to lenders seeking their feedback.
Federal bank regulator proposes tightening test for uninsured mortgages
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OTTAWA – The federal banking regulator is proposing to up the stress-test facing homebuyers with uninsured mortgages in light of the economic ripple effects from the COVID-19 pandemic.
The proposal from the Office of the Superintendent of Financial Institutions would set the qualifying rate for uninsured mortgages at the contracted rate plus two percentage points or 5.25 per cent, whichever is higher.
As it stands, any buyer whose down payment on a home is less than one-fifth of the purchase price has to show they can afford mortgage payments if the interest rate was two percentage points higher than what the bank is offering them or the five-year benchmark rate published by the Bank of Canada which sits at 4.79 per cent, whichever is higher.
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Good evening, let’s start with today’s top stories:
The regulator that oversees the country’s banks wants to make it harder for borrowers to qualify for a mortgage, as low interest rates on mortgages s continue to drive a super-hot housing market.
The Office of the Superintendent of Financial Institutions (OSFI) says its proposed changes to the mortgage stress test for uninsured mortgages would effectively raise the minimum qualifying rate to 5.25 per cent. Currently, rules require banks to qualify borrowers at a rate two percentage points higher than the market rate or the Bank of Canada’s conventional five-year rate of 4.79 per cent, whichever is higher.
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