Brokers split on pending regulation changes

MortgageBrokerNews.ca 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.