Will new B-21 guidelines slow the market?

Will new B-21 guidelines slow the market?

The question on everyone’s mind in the real-estate industry right now is, “Will the introduction of OSFI (Office of the Superintendent of Financial Institutions) B-21 guidelines slow the current housing market?”

Image courtesy of ddpavumba / FreeDigitalPhotos.net

Image courtesy of ddpavumba / FreeDigitalPhotos.net

The answer we’ve come up with and that several others have concluded is that this is doubtful.

There’s been so much speculation on  OSFI’s long-awaited B-21 mortgage insurer guidelines. There is fear that it might slow the housing market, but we’ve seen the draft and the guidelines are simple, practical and many are already being implemented by lenders and insurers.

Here is a quick summary:

  • B-21 puts heightened focus on the consistency of underwriting decisions, which means:
    • Fewer underwriting exceptions with insured mortgages.
    • Level the playing field for all lenders.
  • Lenders’ underwriting will be scrutinized:
    • Audits of individual files will be more frequent.
    • OSFI suggests that lenders with “proportionately higher levels of delinquencies and claims” will be held under more scrutiny.
  • Data disclosure will be required:
    • Insurers will now be required to publicly disclose risk-related statistics every quarter.
  • Cash-back down payments will very soon be extinct.

At River City Financial in Edmonton, we believe that the new B-21 guidelines will increase the stability of Canada’s housing and finance system without being overly restrictive.

Still have questions or concerns? We love to answer questions! Comment below or give us a call (587) 409-2944.

For more information, visit our sources: http://www.theglobeandmail.com/report-on-business/economy/housing/regulator-set-to-release-new-mortgage-rules/article17925905/

http://www.osfi-bsif.gc.ca/Eng/Pages/default.aspx

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/mortgage_insurance.html

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