The Globe and Mail reports in its Friday, April 9, edition that the Office of the Superintendent of Financial Institutions wants to impose a higher threshold to qualify for a home loan.
The Globe's Rachelle Younglai and James Bradshaw write that the OSFI is proposing changes to the mortgage stress test for uninsured mortgages that would effectively require borrowers to qualify at a rate of 5.25 per cent, instead of the Bank of Canada's benchmark five-year rate of 4.79 per cent.
The OSFI said it would revisit the qualifying rate at least once a year to "ensure it remains appropriate for the risks in the environment." CIBC's Benjamin Tal says, "It will make the situation worse, since demand will rise as buyers will try to move ahead of the change and accelerate purchasing activity."
RBC supports tighter underwriting standards.
However, some economists say stricter rules will do little to slow the market.
BMO's Douglas Porter says: "This measure could have a mild dampening effect. But it's unlikely to singlehandedly turn this freight train around."
Industry group Mortgage Professionals Canada, which has been lobbying for an easier stress test, says the new rule will hurt first-time home buyers.
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