{"id":7310,"date":"2016-09-27T02:00:12","date_gmt":"2016-09-27T06:00:12","guid":{"rendered":"http:\/\/www.zoocasa.com\/blog\/?p=7310"},"modified":"2022-04-25T14:05:51","modified_gmt":"2022-04-25T18:05:51","slug":"tougher-mortgage-lending-rules-are-coming-very-soon","status":"publish","type":"post","link":"https:\/\/www.zoocasa.com\/blog\/tougher-mortgage-lending-rules-are-coming-very-soon\/","title":{"rendered":"Mortgage Lending Rules"},"content":{"rendered":"<p><a href=\"http:\/\/www.zoocasa.com\/toronto-on-real-estate\">Buying a home in the Greater Toronto Area<\/a> is easier said than done, as the availability of homes for sale is shrinking \u2013 but making a home purchase sooner rather than later will be in your best interest, as new mortgages rules are on the way.<\/p>\n<p>A recent announcement from Canada\u2019s financial regulator, the Office of the Superintendent of Financial Institutions (OSFI), reveals banks and lenders who offer mortgage financing will soon face stricter regulations. That ultimately means tougher lending rules for you \u2013 the homebuyer.<\/p>\n<p><strong>Related Read: <a href=\"http:\/\/www.zoocasa.com\/blog\/banks-are-worried-about-toronto-and-vancouver-home-prices\/\">Banks are Worried About Home Prices in Toronto and Vancouver<\/a><\/strong><\/p>\n<h2>Reigning in Debt Risk<\/h2>\n<p>The increasingly hot housing market (what an understatement!) has prompted lenders to be more cautious with underwriting processes, and to implement higher standards when originating insured mortgages. Mortgages require insurance when less than a 20% down payment is made; a high-ratio insurance premium is added on top of the monthly mortgage principal and interest payments over its term. This is a way to keep housing prices, and unsustainable debt levels, in check.<\/p>\n<h2>What is OSFI Planning?<\/h2>\n<p>OSFI, an independent agency of the Government of Canada, supervises and regulates financial companies. It has been meeting with the banking sector to create these new guidelines, which will not only impact home buyers in the Toronto and <a href=\"http:\/\/www.zoocasa.com\/blog\/banks-are-worried-about-toronto-and-vancouver-home-prices\/\">Vancouver housing market<\/a>, but all buyers across Canada.<\/p>\n<p>The purpose of these new regulations is to place more responsibility on banks to make better lending decisions, for fear that Canada\u2019s housing market is overvalued in some cities. OFSI wants to avoid Canadian borrowers becoming overextended in the event of a potential price correction and real estate market downturn. You see, despite the general view that the banks and government don\u2019t care about the average citizen, this shows they actually do care about our general well-being &#8211; but at a cost.<\/p>\n<h2>Higher Capital Requirements to Come<\/h2>\n<p>In these meetings, which have been going on for at least the past six months, federal Finance Minister Bill Morneau, Crown Corporation mortgage insurer Canada Mortgage and Housing Corporation (CMHC) and OSFI have been discussing the possibility of lenders holding on to more capital from residential mortgages. This would better protect them against defaults \u2013 folks who are unable to maintain their mortgage payments, and fall behind on servicing their debt. While no one wants to be in such a position, sometimes life throws in an unexpected curveball\u00a0such as sudden illness, marital split, pregnancy or a death \u2013 factors we can all relate to.<\/p>\n<h2>The Challenges of Hanging onto Cash<\/h2>\n<p>However, holding onto more money will create additional costs for the banks, as they must now offset the interest that would normally be collected on money lent out in mortgages. Of course, those extra costs will be passed down to you \u2013 the borrower.<\/p>\n<p>As well, the possibility of increased mortgage rates or stricter lending guidelines could make it even tougher to be approved for a mortgage in the future. We are starting to see lenders asking for more documentation at mortgage origination as it is \u2013 tougher rules will also reduce the amount of mortgage you can apply for. It could mean living in your parents\u2019 basement for longer if you don\u2019t act soon!<\/p>\n<h2>Speak Your Mind<\/h2>\n<p>Not a fan of higher mortgage rates or tougher lending rules? You have the opportunity to make your voice heard until October 18 by <a href=\"http:\/\/www.osfi-bsif.gc.ca\/Eng\/osfi-bsif\/med\/Pages\/cptins_nr20160923.aspx\">submitting your comments to OSFI<\/a>.<\/p>\n<p>Some lenders will begin to phase the new rules in by October 31, with stricter rules to come November 1, and to be fully in-force by January 1, 2017. More changes are expected to come in the new year \u2013 stay tuned as we break down what they\u2019ll mean for your homebuying experience.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Buying a home in the Greater Toronto Area is easier said than done, as the availability of homes for sale is shrinking \u2013 but making a home purchase sooner rather than later will be in your best interest, as new mortgages rules are on the way. A recent announcement from Canada\u2019s financial regulator, the Office [&hellip;]<\/p>\n","protected":false},"author":44,"featured_media":7312,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jnews-multi-image_gallery":[],"jnews_single_post":{"format":"standard"},"jnews_primary_category":[],"footnotes":""},"categories":[3,172],"tags":[978,1017,964,1018,897,1019,1020],"class_list":["post-7310","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ask-the-pros","category-mortgage-news","tag-canada-real-estate","tag-mortgage-lending-rules","tag-mortgage-qualification","tag-office-of-the-superintendent-of-financial-institutions","tag-osfi","tag-toronto-housing-market","tag-vancouver-housing-market"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Tougher Mortgage Lending Rules to Come - Zoocasa Blog<\/title>\n<meta name=\"description\" content=\"Tougher mortgage lending rules will be introduced soon by Canada&#039;s banks, as the government&#039;s financial regulator looks to reduce borrowing risk.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.zoocasa.com\/blog\/tougher-mortgage-lending-rules-are-coming-very-soon\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tougher Mortgage Lending Rules to Come - Zoocasa Blog\" \/>\n<meta property=\"og:description\" content=\"Tougher mortgage lending rules will be introduced soon by Canada&#039;s banks, as the government&#039;s financial regulator looks to reduce borrowing risk.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.zoocasa.com\/blog\/tougher-mortgage-lending-rules-are-coming-very-soon\/\" \/>\n<meta property=\"og:site_name\" content=\"Zoocasa Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Zoocasa\" \/>\n<meta property=\"article:published_time\" content=\"2016-09-27T06:00:12+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-04-25T18:05:51+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.zoocasa.com\/blog\/wp-content\/uploads\/2016\/09\/Mortgage-Lending-Rules.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"600\" \/>\n\t<meta property=\"og:image:height\" content=\"400\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Mike Bricknell\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@Zoocasa\" \/>\n<meta name=\"twitter:site\" content=\"@Zoocasa\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Mike Bricknell\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.zoocasa.com\/blog\/tougher-mortgage-lending-rules-are-coming-very-soon\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.zoocasa.com\/blog\/tougher-mortgage-lending-rules-are-coming-very-soon\/\"},\"author\":{\"name\":\"Mike Bricknell\",\"@id\":\"https:\/\/www.zoocasa.com\/blog\/#\/schema\/person\/eb6bc39495ec8f14fcfbb3cfa5ca9319\"},\"headline\":\"Mortgage Lending Rules\",\"datePublished\":\"2016-09-27T06:00:12+00:00\",\"dateModified\":\"2022-04-25T18:05:51+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.zoocasa.com\/blog\/tougher-mortgage-lending-rules-are-coming-very-soon\/\"},\"wordCount\":617,\"publisher\":{\"@id\":\"https:\/\/www.zoocasa.com\/blog\/#organization\"},\"keywords\":[\"Canada real estate\",\"mortgage lending rules\",\"mortgage qualification\",\"Office of the Superintendent of Financial Institutions\",\"OSFI\",\"Toronto housing market\",\"Vancouver housing market\"],\"articleSection\":[\"Ask the Pros\",\"Mortgage News\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.zoocasa.com\/blog\/tougher-mortgage-lending-rules-are-coming-very-soon\/\",\"url\":\"https:\/\/www.zoocasa.com\/blog\/tougher-mortgage-lending-rules-are-coming-very-soon\/\",\"name\":\"Tougher Mortgage Lending Rules to Come - 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