OTTAWA – Canada’s financial regulator is looking to issue new guidelines governing high-risk mortgages in the country’s housing market.
The Office of the Superintendent of Financial Institutions has asked for comments on the guidelines that would compel mortgage insurers to do due diligence on the ability of borrowers to service their debts and also require them to tighten monitoring procedures.
But OSFI has stopped short — so far — of further tightening mortgage rules, such as requiring that low-risk mortgages also be subject to 25-year amortization periods. Currently the rule applies only to higher-risk mortgages with less than 20 per cent down payment, where insurance is mandatory.
CIBC deputy chief economist Benjamin Tal says the new guidelines, once adopted, would have only minimal impact on the market.
They would formalize what is already the practice in Canada among lenders, such as Canada’s banks.
Tal adds that OSFI and the government…
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