It turns out nine months is not only enough time to make a baby, it's enough time to answer regulatory feedback. After three quarters of nail-biting anticipation, Canada's bank regulator has replied to feedback on the B-20 mortgage guidelines it proposed in January.
For those new to this story, OSFI is planning new rules (they call them guidelines) that make it harder for those with bigger debt loads to get a mortgage. The initiatives pertain specifically to uninsured mortgage underwriting at federally regulated financial institutions (FRFIs). Depending on what OSFI finally decrees, the implications could be significant for home prices, lender volumes and the options available to individual borrowers.
"Stakeholders were generally not supportive of additional debt serviceability measures," OSFI said today. "A key concern raised was the disproportionate impact that new, industry-wide measures could have on smaller institutions with unique business models."
"We believe additional measures are needed to mitigate the underlying vulnerability of a buildup in highly indebted borrowers," OSFI summarized. "We will therefore pursue targeted supervisory actions that will aim to limit FRFIs’ individual exposures to high household indebtedness over time."
Here's a quick summary of OSFI's responses and more on what the regulator has up its sleeve: