OSFI rejects pleas to loosen mortgage rules
BNN Bloomberg
The head of Canada’s main banking-industry regulator said his agency won’t bow to pressure to loosen mortgage-underwriting standards in response to rising interest rates that are boosting homebuying costs.
Peter Routledge, superintendent of the Office of the Superintendent of Financial Institutions, said at an event in Toronto on Thursday that one of the agency’s top priorities is intensifying its focus on residential mortgage-underwriting standards. OSFI in 2017 introduced a package of rules, known as Guideline B-20, that tightened qualification for uninsured mortgages.
“The uncertainty and anxiety caused by the rising interest rate environment have understandably caused some Canadians to advocate for the loosening of the underwriting standards in Guideline B-20,” Routledge said. “Let me reassure those of you who oppose a loosening of underwriting standards that OSFI will not do that.”
Routledge said he’s glad that the provision in Guideline B-20 that required institutions to stress-test potential mortgage borrowers at higher interest rates was in place in recent years. With rates rising, many homeowners will be hit with higher costs, and it’s “reassuring” to know they’ll be better prepared to weather the challenges ahead, he said.
