Pandemic postponed change to \u0027floor\u0027 borrowers must pass to qualify and now officials appear in no hurry to revisit policy
“Currently the housing market in Canada continues to evolve given the unprecedented conditions brought on by the COVID-19 pandemic,” an OSFI spokesperson said in an email. “OSFI needs to be sure that consultations on the new proposed B-20 benchmark rate for uninsured mortgages reflects Canada’s new context.”
The proposed new benchmark rate for the minimum qualifying rate for insured mortgages remains suspended until further noticeBefore the pandemic, adjusting the mortgage stress tests was an issue on the radars of bankers, realtors, regulators and federal politicians. Borrowers had packed on a lot of debt and the Canadian housing market was being watched closely for any signs of a wobble.
Rather than using a five-year benchmark published by the Bank of Canada — which is based on rates “posted” by the country’s six largest banks — the new floor was to be set using mortgage-insurance applications, plus an additional 200 basis-point buffer. Borrowers would then be tested with the new benchmark or their contract rate, whichever is higher. For uninsured mortgages, it would be the contract rate plus two percentage points.
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