Canada’s banking regulator, OSFI, is back in the news saying it is looking at further tightening when it comes to mortgage rules. Specifically, the Office of the Superintendent of Financial Institutions (or OSFI) is now considering limiting banks from being able to offer amortizations longer than 25 years.
Currently, there are still lenders offering up to 35 year amortizations for “low ratio” mortgages. Low Ratio meaning less than 80% Loan to Value.
OSFI told industry newsletter Canadian Mortgage Trends in this article that it’s “doing some preliminary consultation with financial institutions” on the issue.
From a consumer stand point, the change from 30 year amortization to 25 year amortization on a $400,000 mortgage at today’s rates is approx. $210 per month. This payment difference would be equivalent to an interest rate increase of approx. 1%
It appears we may see rates stay low for some time yet, is this how the regulators are trying to cool our housing market given the prolonged low interest rate environment?