We’ve talked a lot this week about mortgage rules, and whether or not Finance Minister Jim Flaherty is going to tighten them even further. One industry player says that while he does expect this year to get tougher for those looking for mortgages, changes aren’t going to come from the Finance Minister, but rather the Office of the Superintendent of Financial Institutions (OSFI.)
“The regulations are just going to keep getting worse,” says Ron Butler of Verico Butler Mortgages. “In 2014, OSFI is commencing B21, which is their work with the three mortgage insurers and the three mortgage insurers are the backbone of all the monolines. It will have less effect on the banks for conventional business but will have a big effect on the monolines for conventional business.”
The B21 guidelines Butler’s speaking about are going to be available for public commenting in March of this year. If after that commenting and further review by the OSFI those regulations still pass, all three of the mortgage insurers in Canada – Genworth, Canada Guaranty and CMHC – will be required to become much more strict with their guidelines of which mortgages they will back in case of default.
And, Butler says, it’s going to be brokers that feel the pinch of further mortgage tightening, more so than bankers. He also says that these changes might mean that even conventional mortgages are restricted to 25-year amortizations.
“We’re going to feel the impact of B21 unless in the first quarter the Minister of Finance sees that the pricing increase in property values in Canada is really starting to stop or slow and it’s no longer going to be expanding in 2014,” continues Butler. “If he thinks that at the end of March that the price of houses is going to keep on going in Toronto, Vancouver and Calgary, I wouldn’t be surprised if conventional mortgages went up to 25 year amortization.
“That creates more intense rule-oriented difficulties. That’s going to get worse and worse, it’s not going to get any better this year. Whatever pain we felt on the underwriting side last year, the painful changes are going to be there. There’s going to be no relief, and there are going to be more changes.”
