(Reuters) – Canada on Thursday said it would launch a review of its so-called B-20 mortgage guidelines in January and left the benchmark for the country’s mortgage stress test unchanged.
The Office of the Superintendent of Financial Institutions (OSFI) said the minimum qualifying rate (MQR) for uninsured mortgage borrowers would stay at 5.25%. This makes the benchmark either the rate the borrower pays plus 200 basis points, or 5.25%, whichever is greater.
“We expect to leave the MQR at its current rate pending the outcome of the review, although the economic environment could result in a more immediate change,” the regulator said.
OSFI introduced new rules in 2017, known as B-20, that tightened qualification for uninsured mortgages.
“Maintaining the minimum qualifying rate supports prudent underwriting standards for insured mortgages and builds in a buffer for home buyers in case of changing economic or personal circumstances,” said Finance Minister Chrystia Freeland.
Canada will continue monitoring the housing market and review the insured minimum qualifying rate as warranted, Freeland added.
Canada’s housing market has gone cold, with buyers sidelined by soaring borrowing costs and sellers holding off listing in hopes of a spring rally, while higher interest rates mean prices need to fall more before any rebound materializes, experts have said.
(Reporting by Juby Babu in Bengaluru; Editing by Mark Potter)
