70-year amortization periods not realistic: OSFI
BNN Bloomberg
A regulatory government agency has weighed in on reports of mortgage amortizations spanning decades longer than the typical 25 years, saying those projections do not reflect a borrower's actual repayment period and do not change a borrower's contractual obligations
On Wednesday, the Office of the Superintendent of Financial Institutions (OSFI) published a statement addressing reports of long-extended amortizations for individuals with variable-rate products and fixed payments – saying these reports are “not entirely accurate” and don’t reflect the actual timeline someone will be expected to pay back their loan.
“These kinds of projected amortizations are not realistic and do not represent what a borrower’s actual repayment period will be. Importantly, they do not change the borrower’s contractual amortization,” OSFI said in the statement posted to its website.
“Rather, they are hypothetical calculations of the amortization period which assume the borrower continues making the same fixed payments for the duration of the loan, with the current interest rate.”
