Mortgage, Money and Dream – Our thoughts on Canadian Mortgage Market
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Now the five years posted rate for RBC, BMO, TD, CIBC are at 5.14%. Qualifying rate at Bank of Canada website is 5.14%. Went down by 0.15% after a long time, since October 2011 it was at 5.29%.

After a report obtained by Bloomberg showed that increasingly relaxed lending standard by Canadian lenders are raising concerns of the federal regulator – Office of the Superintendent of Financial Institutions Canada (OSFI) – Finance Minister Jim Flaherty said that he is equally worried.

Flaherty also mentioned that the issues are being corrected.

The lending practice of a number of large Canadian lender will now come under the microscope of the finance department.

OSFI is now reviewing minimum criteria for residential mortgage underwriting in line with Financial Stability Board‘s (FSB) principles for mortgage underwriting.

The public consultation paper for international mortgage underwriting principles was published by Financial Stability Board (FSB) in last October. The Office of the Superintendent of Financial Institutions wants to add some more to those standards.

One of those extra points is Policy versus Practice. OSFI said that;

Underwriting practices of FRFIs (Federally Regulated Financial Institution) should comply with the established mortgage underwriting policy of that institution. Exceptions should be kept to a minimum, closely tracked and, as appropriate, approved by the Board and/or senior management to ensure adherence to the risk appetite and tolerance of the FRFI.

Does this mean that there are too many exceptions are being approved? Any agent would know how difficult it is to get an exception from a lender. This concern from OSFI points to the FRSIs internal exceptions – may be.


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