“For clients with a low – or no – down payment there is definitely going to be an influx (of business) because when B-21 kicks in it will effectively eliminate zero down payment mortgages so I could definitely see an influx of people getting into the market,” Lior Herhkovitz of Mortgage Edge told MortgageBrokerNews.ca “Especially those with a very low down payment.”
The B-21 draft, released Monday, is based on OSFI’s internal review as well as the Financial Stability Board and the Joint Forum. It is currently in a consultation period that is open until May 23. Once all the comments and recommendations have been considered, the final guideline will be issued and an implementation date will be set, according to OSFI’s official release.
The B-21 guidelines follow OSFI’s B-20; a set of recommendations that shortened the amortization period and reduced allowable debt to income ratios. And while the industry was hit hard by the B-20 recommendations, brokers are much more optimistic about B-21.
“It could have been worse; I’m a little bit relieved and the good thing is that for now it remains a draft so it’s not going to implemented anytime soon which gives us more time to basically close 100 per cent financing type of mortgages to the credit unions,” Hershkovitz said. “But definitely it’s going to be restrictive for new home buyers who don’t have much of a down payment. They’re going to have to face some serious headwinds once these policies take effect.”
One broker is preparing for an influx of business prior to the official implementation of OSFI’s Guideline B-21 Residential Mortgage Insurance Underwriting Practices and Procedures.