Thinking of applying for a Toronto mortgage in the near future? Thanks to new changes from the Office of the Superintendent of Financial Institutions, stricter rules for getting a mortgage look to be on the agenda.

As of November 1, 2016, those looking to buy a home will face stricter regulations as the OSFI implements changes for banks and lenders who offer mortgage financing.

As a mortgage broker in Toronto this obviously is something that directly affects our industry and could potentially affect my clients, so it’s important to know what is on the horizon.

With markets such as Toronto and Vancouver at a high risk of overheating, the OSFI has brought in these changes in an attempt to manage the changing risks in the mortgage market in Canada. The new rules will force banks to hold more capital in order to cover current market mortgage.

According to a report from MoneySense.ca, these new changes will protect taxpayers from the impact of financial institutions that are over-leveraged. We surely learned this after the 2008 financial crisis in the United States.

But how exactly will this affect those looking to buy a home in Canada?

The new OSFI regulations will affect all markets rather than solely hot markets, such as Toronto. Once November 1 hits, Canadians could potentially have a harder time getting a mortgage or qualifying for as big of a mortgage as you may expect. Additionally, we could see a slight increase in mortgage rates due to this.

The revised guideline doesn’t plan to significantly change how much capital mortgage lenders will be required to keep, though. The ultimate goal is to make sure that capital still mirrors the potential risks in the financial industry.

One new policy, called “countercyclical buffer”, requires banks to set aside increased amounts of money should the mortgage market become highly risky. According to the OSFI banks will have between six and twelve months of notice before it comes into play.

These new changes from the OSFI come after early this summer they announced that they would be pinning down its expectations for mortgage underwriting in reaction to the changing housing market.

While these changes are designed to protect banks and lenders for potential losses, it is uncertain how much it will actually effect those who shop for mortgages. We can certainly expect slightly tighter rules for who qualifies for mortgage loans and possibly even a small rise in rates. Again, these are designed more to protect lenders from any potential losses.

In conclusion, if you are interested in obtaining a mortgage in the area it is highly recommended that you work with a Toronto mortgage broker. Whether the broker is local to your our out of town, it really doesn’t make that much of a difference. I work with clients all over Ontario. As someone who has been involved in the industry for nearly 10 years, I have the experience and knowledge to help clients navigate the complex process.

If you are unsure about whether or not you qualify for a mortgage or have a question, contact me today and I can certainly give you answers.

Source: http://www.moneysense.ca/news/expect-tougher-mortgage-rules-by-november/

Source: http://canadianmortgagetrends.com/canadian_mortgage_trends/2016/09/more-on-osfis-recent-capital-guidance.html