You might have heard on the news today about the upcoming changes that will be going into effect come January 1st, 2018.
To put you at ease and give you some insight, below is a breakdown of what these new guidelines will entail and also a link to the Government website that outlines the B20 Mortgage Rules.
Since the changes were just announced today, the lenders will need time to adjust their policies and guidelines to reflect the new rules. Once these new rules are applied, I will keep you up to date on how this will affect your own mortgage financing as we approach the January 1st, 2018 implementation.
As always, I am here to guide you with your own personal mortgage financing and answer any questions or concerns you may have. Please reach out - I’m here to help.
Implementation of B-20 Guidelines
As you may have already heard, the OSFI (Office of the Superintendent of Financial Institutions Canada) published its final version of the B-20 Guideline Residential Mortgage Underwriting Practices and Procedures which comes into effect on January 1, 2018 and affects all federally regulated financial institutions.
The following highlights the changes which surrounds the minimum qualifying rate for uninsured mortgages:
- OSFI is setting a new minimum qualifying rate, or “stress test” for uninsured mortgages. Guideline B-20 now requires the minimum qualifying rate for uninsured mortgages to be the greater of the five-year benchmark rate published by the Bank of Canada or the contractual mortgage rate + 2%
- OSFI is requiring lenders to enhance their loan-to-value (LTV) measurement and limits so they will be dynamic and responsive to risk.
- OSFI is placing restrictions on certain lending arrangements that are designed to circumvent LTV limits. This prohibits the financial institution from arranging with another lender a mortgage or other lending products that circumvents the institution’s maximum LTV ratio or other limits in its underwriting policy.
For more information on Guideline B-20, please refer to this link - http://www.osfi-bsif.gc.ca/Eng/fi-if/rg-ro/gdn-ort/gl-ld/Pages/b20_dft.aspx
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