Good news from Canada’s Banking Regulator!
After nine months of discussions with industry stakeholders, the Office of the Superintendent of Financial Institutions (OSFI) has decided not to move forward with certain proposed mortgage regulations.
OSFI has confirmed that they won’t pursue two of their proposed regulations: debt-to-income (DTI) restrictions and debt service loan coverage restrictions. While the final decisions on other proposals are pending, OSFI is re-evaluating their approach.
For LTI and DTI restrictions, OSFI listened to concerns about redundancy and practicality, especially for smaller lenders. They won’t implement DTI restrictions but are considering debt service ratios as an alternative.
Regarding debt-service coverage restrictions, OSFI will continue to assess the proposal’s merit, while the interest rate affordability stress test will be applied more cautiously.
Respondents also stressed the importance of improved income verification to prevent mortgage misrepresentation and suggested collaboration with the Canada Revenue Agency.
OSFI recognizes the need for balanced efforts to address Canada’s housing affordability crisis, emphasizing the importance of housing supply for a stable mortgage market and the Canadian economy.
In summary, OSFI is adjusting its approach to proposed mortgage regulations based on valuable feedback and industry insights, which is a positive development.
Have a questions about OSFI mortgage regulations? Please feel free to reach out to us anytime!