The Financial Post reports in its Saturday, July 8, edition that investors do not seem to like the latest proposed changes in home financing being ushered in by the Office of the Superintendent of Financial Institutions.
The Post's Barbara Shecter writes that on Thursday, OSFI proposed a required stress test to qualify for all uninsured mortgages. In addition, OSFI proposed to prohibit co-lending or mortgage "bundling" arrangements that appear designed to circumvent regulatory requirements.
A bundled mortgage is when two lenders partner to secure a loan against the same property. If only one lender is regulated by OSFI, the loan-to-value ratio on the property -- a key measure of risk -- may appear lower than it is when both lenders are taken into account.
Shares of Home Capital Group, Equitable Group and Equity Financial Holdings all lost ground in trading Friday.
Analysts said OSFI's proposed prohibition on such arrangements, if adopted, would affect a small segment, estimated at around 1 per cent, of the mortgage market. However, they said the biggest impact would be felt by alternative mortgage lenders, firms that provide loans to people who do not qualify for financing from the big banks.
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