Uninsured Mortgage Regulations Report

In a recent article by The Simon Fraser Institute:

OFSI continues to further tighten the underwriting process for residential mortgage financing by introducing an additional stress test proposal for uninsured mortgages (mortgages with a loan-to-value ratio of below 80%). This new proposal would examine what the impact of a 200 basis point (2.00%) increase in mortgage borrowing rates would have on Canadian borrower’s repayment capacity.

There’s some very insightful background information in the article in regards to this new proposal; some powerful data comparing residential mortgage arrears rates between Canada and the United States; and the reasons why perhaps a universal approach to compliance with the FSB might not be the right approach when OFSI has the ability to assess and evaluate institutions individually.

The article also highlights the flexibility that alternative lending channels such as mortgage finance companies that use capital from private lenders have.

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