OSFI (the Office of the Superintendent of Financial Institutions) released new standards for assessing mortgage insurance risk recently. These changes are geared to help limit the risk associated with high loan to value mortgages, meaning mortgages with less than 20% down. The new regulations are also said to take “creditworthiness of the homeowner, the remaining amortization period and the outstanding loan balance” into account.
This means more capital must be set aside by the insurer for purchasers looking for larger mortgages with smaller downpayment amounts as well as the other elements mentioned above. OSFI updated these regulations to allow for insurers to recover more easily from default if it occurs with these ‘riskier’ mortgages.
Genworth Canada MI, one of the main insurance companies in Canada, released a statement saying they are already holding more capital and will abide by these new regulations. They also said this could mean Torontonians will see an increase in premium insurance rates in the new year. Increased premiums will negatively affect the buyers who need default insurance and may delay their buying timelines.
For more information on how this could impact you, give Hanley Mortgage Group a call. We’d be happy to discuss your options with you!
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If you’d like to read more:
OSFI changing rules for mortgage insurers and update capital requirements
Financial regulator raises mortgage insurance capital requisites