The OSFI proposal limiting access to mortgages as Canadians march toward retirement is least likely to pass into “law,” the head of Genworth’s risk operations reassured brokers.
“Linking age to amortization,” Charles Sweeney said at last month’s IMBA conference, “of all the proposals that’s one that I most doubt will make it to the final draft.”
A final decision from the federal regulator is expected in the next couple months, with the window for industry feedback having closed earlier this week.
In responding to OSFI’s discussion paper, CAAMP and individual broker networks registered concerns about the regulator’s move to stiffen qualifying guidelines on several fronts. Prominent among them was the idea of formally allowing banks and other federally-regulated mortgage lenders to consider a borrower’s age as part of the underwriting process.
The discussion paper is proposing “the borrower’s likely income and repayment capacity in retirement” be taken into account when qualifying.
CAAMP spelled out its objection in a response released this week.
“It can be difficult to determine a borrower’s career path and where they will be in a year or two from application let alone in five or ten years,” writes the association`s president. “Mortgages in Canada are underwritten at the time of application. Underwriters and lenders consider income, including past income, credit score and other important factors such as location of the property and its value.”
Sweeney`s comments suggest he may agree with much of that position. More importantly, the argument is likely to cut muster with decision-makers at the regulator. He pointed to the government’s own move to raise the qualifying mark for Old Age Security assistance to 67.
Still, other challenges are on the horizon for brokers as OSFI looks to implement qualifying standards at renewal, along with property valuation updates.
But that new tier of regulation may actually work to their benefit as more and more Canadians seek out expert mortgage help to navigate an increasingly complex landscape.