Regulator set to release new mortgage rules

Regulator set to release new mortgage rules

Article by Tara Perkins, Real Estate Reporter, The Globe and Mail, April 10, 2014

“Canada’s financial regulator is close to releasing a new set of standards for Canada’s mortgage insurers, one that the real-estate industry has worried may chill the market.

The Office of the Superintendent of Financial Institutions (OSFI) has been working on the guidelines since 2012, after it released a similar set of mortgage lending standards for banks.

The standards for banks, known in the industry as guideline B20, pushed lenders to be more cautious in areas such as credit checks on borrowers, document verification and appraisals. They also capped the amount that any individual can borrow on a home equity line of credit at 65 per cent of the home’s value.

Many industry players say the standards contributed to the decline of Canadian home sales that occurred in late 2012 and early 2013.

The real estate industry has been nervously awaiting the standards for mortgage insurers, which will be known as B21, to see whether they too will have a dampening effect on the housing market. OSFI originally indicated that a draft of the new rules would be released in early 2013, and more recently said they would be published by the end of last month. Sources now indicate they will be released as early as Friday.”

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