The Canadian Mortgage Brokers Association (CMBA) has sent a letter to the regulator with its suggestions for the B-20 update.
The Office of the Superintendent of Financial Services (OSFI) announced in July it will be increasing its supervisory efforts for residential mortgage underwriting – specifically focusing on Guideline B-20, which it also announced potential changes to.
Those changes include;
- Requiring a qualifying stress test for all uninsured mortgages;
- Requiring that Loan-to-Value (LTV) measurements remain dynamic and adjust for local market conditions where they are used as a risk control, such as for qualifying borrowers;
- Expressly prohibiting co-lending arrangements that are designed, or appear to be designed to circumvent regulatory requirements.
CMBA, however, recently sent a letter to OSFI with its suggestions around how the regulator could best tweak B-20.
They include; allowing lenders to continue to bundle first and second mortgages, exempting all mortgages with principal amounts of $499,000 or less from the requirement to qualify borrowers at a qualifying rate, and permit qualification at the true contract rate associated with a 5 year fixed term, allowing the same qualifying rate be used for insured mortgages that is prescribed for non-insured mortgages, and amending underwriting criteria for rental properties.
“Minister Morneau has provided lengthy commentary on his views around mortgage rules in his response to the Recommendations of the House of Commons Standing Committee on Finance, which recently produced a study on housing affordability,” Samantha Gale, CMBA CEO, told MortgageBrokerNews.ca. “In his response, he does not acknowledge the need to wait until the full effects of the October, 2016 mortgage rule changes are known before implementing further rule changes. However, the purpose of a consultation is for government to hear various alternative analyses and solutions. Government needs to hear this, as it becomes entrenched in certain perspectives. We are confident that the various perspectives, including that of CMBA are being heard by the federal government.”
To read the letter in full, click here
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The industry continues to fight against further mortgage rule tightening.