As you may have heard, last week there were some changes announced in the Canadian mortgage industry for insured mortgages. The Office of Superintendent of Financial Institutions (OSFI) also released its final Underwriting Guidelines as a result of the B20 Discussion Paper on the same day and they seem to have been overshadowed by the new guidelines. These changes will affect federally regulated financial institutions and how they qualify their clients for mortgages.
Here are a few highlights of the changes that will happen in combination with the heavily publicized Bank of Canada changes.
• Maximum Loan to Value for Home Equity Lines of Credit will be reduced from 80% to 65%. They will continue to not have a set time amortization, however lenders are must now expect the borrowers to have the ability to repay over time
• The qualifying rate will now have to be used to qualify for all conventional mortgages. It is already being used to qualify variable rates and fixed terms of less than 5 years
• Self employed borrowers will now have to prove reasonable income effectively eliminating the “stated income” programs currently available
• “Cash-back” will no longer be considered as part of a borrower’s down payment. Every borrower will be required to have the minimum 5% for their downpayment without exception
• Re-qualification upon renewal will not mandatory, however lenders will be expected to check the borrower’s credit worthiness throughout the life of the mortgage
Federally regulated lenders have until the end of the year to adjust their underwriting guidelines; however it is expected that most lenders will begin to impose them right away.
Basically, lenders will have higher expectations of Canadians looking to get a mortgage in the next few years. They will be monitored closely to ensure that they are minimizing their risk and proving their due diligence in qualifying borrowers. As getting a mortgage becomes increasingly more difficult, it is equally as important for anyone who has a mortgage or considering getting a mortgage to speak to a qualified mortgage professional regarding all of their options.
To view the final Guidelines click here
To view OSFI's Interim Update Letter click here
To view an article from CanadianMortgageTrends.com click here
To view an article from the Financial Post click here
Please contact me with any questions.
www.christinebuemann.com
Here are a few highlights of the changes that will happen in combination with the heavily publicized Bank of Canada changes.
• Maximum Loan to Value for Home Equity Lines of Credit will be reduced from 80% to 65%. They will continue to not have a set time amortization, however lenders are must now expect the borrowers to have the ability to repay over time
• The qualifying rate will now have to be used to qualify for all conventional mortgages. It is already being used to qualify variable rates and fixed terms of less than 5 years
• Self employed borrowers will now have to prove reasonable income effectively eliminating the “stated income” programs currently available
• “Cash-back” will no longer be considered as part of a borrower’s down payment. Every borrower will be required to have the minimum 5% for their downpayment without exception
• Re-qualification upon renewal will not mandatory, however lenders will be expected to check the borrower’s credit worthiness throughout the life of the mortgage
Federally regulated lenders have until the end of the year to adjust their underwriting guidelines; however it is expected that most lenders will begin to impose them right away.
Basically, lenders will have higher expectations of Canadians looking to get a mortgage in the next few years. They will be monitored closely to ensure that they are minimizing their risk and proving their due diligence in qualifying borrowers. As getting a mortgage becomes increasingly more difficult, it is equally as important for anyone who has a mortgage or considering getting a mortgage to speak to a qualified mortgage professional regarding all of their options.
To view the final Guidelines click here
To view OSFI's Interim Update Letter click here
To view an article from CanadianMortgageTrends.com click here
To view an article from the Financial Post click here
Please contact me with any questions.
www.christinebuemann.com
Comments
Post a Comment