The Office of the Superintendent of Financial Institutions (OSFI) released a consultation last week with three proposals aimed at ensuring borrowers actually have the money to cover the debt they incur, and restricting banks in Canada from lending to those on the margins.
Consumer debt has risen dramatically in recent years, OSFI said, and warned that could create risks to the finances of federally regulated banks, which hold about 80% of all residential mortgages.
The consultation is open until April 14 and the changes are unlikely to take effect before mid-year, but mortgage brokers expect some clients to make a move before then.
"I think this news from OSFI will create a bit of a panic in the market, where buyers sitting on the sidelines will probably move a little faster than they expected," said Victor Tran, a mortgage and real estate broker. expert for rate comparison website RATESDOTCA. "I can see a run before the spring market."
That's because adjustments to bank financing rules could force some borrowers to make larger down payments, reduce the size of the mortgage they qualify for or push them toward nonbank lenders that charge higher interest rates and offer shorter term loans . .
Mortgage brokers are warning that if in April the Office of the Superintendent of Financial Institutions tightens the rules to go into effect in June, July or August it will likely be a race for approvals before it goes into effect.
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