The Office of the Superintendent of Financial Institutions stood by its stress test, maintaining that the much-tightened qualifications for mortgages is “working” as anticipated.
“The revisions to B-20 are working; strengthening mortgage underwriting across Canada and improving the resilience of the Canadian financial system to future shocks,” OSFI stated earlier this week, as quoted by the Financial Post.
The updates to B-20 were meant to counteract the dangers presented by housing market volatility and low interest rates. However, the regulatory regime has come under fire from multiple quarters, particularly politicians and real estate industry players.
OSFI assured that it will continue to keep an eye on the mortgage industry.
“While improvements have been made OSFI will continue to monitor lender practices, particularly in the area of income verification, and will be proactive with lenders when it identifies areas requiring attention.”
Last month, Ontario Real Estate Association CEO Tim Hudak called on the federal government to seriously reconsider its current approach, as B-20 has actually inflicted damage “beyond what many thought was the worst case.”
This was especially evident in nationwide residential resale volume, which suffered an 11% annual decline in 2018.
“Not only are many people unable to become home owners at all; others can’t upgrade as their families grow, which in turn means they aren’t selling their starter homes to people trying to buy for the first time,” Hudak stated.
“Beyond addressing the crisis caused by unnecessarily harsh mortgage stress tests, we need a comprehensive set of policies to make the Canadian dream of home ownership a reality for more families every year, not fewer.”