OSFI Changes - New Regulations by "The Regulator"
The Government of Canada has changed the bank guidelines for qualifying a conventional mortgage. As of Jan 01 / 18 borrowers with 20% or more down payment or 20% or more equity when refinancing will qualify based upon the published five-year benchmark rate, currently at 4.89% or their contract rate plus 2% whichever is greater. For most people, this will mean about a 25% smaller mortgage.
Also, the government wants regulated lenders to have more scrutiny around loan to value ratios. Wonder what that means??
Mr. Rudin, the OSFI regulator championing these changes will someday be remembered as either,
1) That really smart regulator who skillfully guided and managed the Canadian Housing market, avoiding a market melt-down, easing prices is Toronto and Vancouver, while protecting our banks.
2) That strong-willed regulator who personally precipitated the greatest destruction of wealth in Canadian History. Destroying the equity in millions of homes, across the entire country, not only Toronto and Vancouver, for no reason except a blind adherence to regulation. “I am a regulator, I must regulate”
Isn’t it fun to watch bureaucrats toy with our lives. And our equity. Mr. Rudin has already hurt the mortgagors in the rest of Canada, outside of Toronto and Vancouver, with his previous rule changes. We can only hope he does not actually cause a national catastrophe. Housing and its related economic influences makes up about 25-30 % of Canada’s GDP. Some would argue Mr. Rudin has done enough damage to one of the most important contributors to our economy.