OSFI’s internal e-mails, obtained by Tom Kmiec, show the regulator is trying to correct the stress test for mortgage loans. Specifically, the correction is targeting the benchmark rate. The e-mail communication shows that OSFI is trying to inform the public about their effort, although the organization still claims that the Canadian benchmark is not as stringent as some other countries’ rate. However, the regulator states that the posted rate is no longer fulfilling the purpose since the rates posted by the banks were quite high. With the housing market in flux due to Covid, experts think that the new implementation needs to start sooner rather than later.
- OSFI is trying to modify the MQR, which it believes is no longer working as intended.
- Big 6 banks are now 33 bps less competitive than the leading national lender, down from 63 bps in March.
- CMHC predicts declining price-growth over the next two years in Vancouver (-6%), Calgary and Edmonton (-11% each).
“With the spring housing market starting late this year and home prices at risk, many in the real estate sector believe OSFI needs to announce a new implementation date soon.”