The Proposed Changes in Mortgage Rules: What You Need to Know

In this blog post, we will be discussing the latest proposed changes in mortgage rules and how it will impact the Greater Vancouver real estate market. The Office of the Superintendent of Financial Institutions (OSFI) has announced three new proposals aimed at mitigating Canada’s residential mortgage market. These proposals include restrictions on loan-to-income (LTI) and debt-to-income (DTI), debt service coverage, and interest rate affordability stress test.

LTI and DTI restrictions would involve measures that would limit mortgage debt or total debt as a percentage of borrower income. OSFI is proposing a lender-level limit to restrict mortgage providers from exceeding their prudent threshold. On the other hand, debt service coverage restrictions would involve measures that would restrict ongoing debt service obligations as a percentage of borrower income. Currently, most lenders follow Gross Debt Service (GDS) and Total Debt Service (TDS) limits, which are 39% and 44%, respectively, but are not enforced by OSFI.

Lastly, the interest rate affordability stress test aims to ensure that borrowers remain in good financial shape. OSFI’s head, Peter Routledge, mentioned that these changes are aimed at protecting borrowers and ensuring their stability. However, with 99.86% of Canadians currently on their mortgages and an all-time low mortgage arrears rate, many are questioning the need for these proposed changes.

While these changes have yet to be finalized and the consultation period is open until April 14, 2023, it’s important to stay informed and understand the potential impact on the real estate market. However, there is some positive news for those in the market for a new home. The bond yield has recently dropped to its lowest level in 6 months, indicating that fixed rates are likely to decline further and potentially boost real estate sales.

We encourage you to share your thoughts and opinions on these proposed changes. If you’re interested in becoming a realtor and joining our team at eXp, we have a fantastic program for new and experienced agents. Don’t forget to pick up a copy of our best-selling book, “Rockstar Real Estate Investing," on Amazon and feel free to reach out to us for any questions or concerns. Thank you for reading, and we hope to see you again soon.