Brokers split on pending regulation changes

Brokers split on pending regulation changes

Brokers split on pending regulation changes recently asked its readers whether or not they believe OSFI is overreaching with its latest proposed rule changes.

Perhaps surprisingly, sentiment was somewhat split.

A total of 311 readers voted and that slight majority – 55.3% -- believe the banking regulator is becoming too intrusive when it comes to regulating the mortgage industry.

An additional 40.5% said no and 4.2% are undecided.

The Office of the Superintendent of Financial Services (OSFI) announced last month 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.
This latest round of proposed changes follows last summer’s, which included a mortgage rate stress test. They also follow months of campaigning by industry associations, lenders, and networks to try to convince the government to avoid enacting further changes.

Many have argued the government has not allowed sufficient time for the full effects of past tightening measures to be felt.

However, it appears others believe further action is needed to cool some of the country’s hottest housing markets.
  • Warren Ross 2017-08-02 1:48:18 PM
    Personally, I think government involvement in the housing market can be a good thing to avoid excesses and to help foster an environment where home ownership is widely attainable for the general public. The question is how to go about it? In my view, a regional strategy would be better than a national one. In regards to insured mortgages, the role of an insurance company is to manage risk. The fact that the insurance companies have one set of guidelines for the entire country, without taking into consideration the risks associated with various markets, is a big mistake. I live in Montreal, and in the last 9 years the value of my home has barely budged, yet over the last few years mortgage guidelines have gotten increasingly stricter due to risks in Toronto and Vancouver. This is ridiculous. If there were tighter guidelines in Toronto, and looser guidelines in Montreal, it would also help bring balance to the national housing market and better redistribution of wealth than transfer payments. Regional guidelines can be reviewed on a regular basis just like monetary policy. (Monetary policy, which is also national policy by nature, has also proved to be inefficient in its mandate of controlling inflation in a country with diverse economies)
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  • Rob Yake 2017-08-02 2:11:40 PM
    Yes to all of that.
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