As a result of its annual review, the Office of the Superintendent of Financial Institutions (OSFI) announced the Minimum Qualifying Rate (MQR) for uninsured mortgages this morning.
OSFI announced that it will make no changes, maintaining the minimum qualifying rate of 5.25% and the floating rate of 2% plus the posted rate previously announced in June 2021. A news release issued by OSFI on the decision states: “in an environment characterised by rising mortgage rates, sustained high inflation and potential risks to borrower income, it is prudent that lenders continue to test borrowers for adverse conditions”.
Mortgages are being tested at much higher rates than the MQR following the Bank of Canada’s recent 50-point increase to the target overnight rate to 4.25% on December 7.
OSFI also stated that a solid margin of safety was in place to ensure that borrowers could keep up with mortgage payments in the event of a negative financial shock such as job loss or reduced income, higher mortgage interest expenses, or higher housing expenses.
OSFI will assess the market impact of its guidance and says it is prepared to make policy changes if necessary.
The next announcement of the overnight rate target is scheduled for January 25, 2023. At the same time, the Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR.
As a result of its annual review, the Office of the Superintendent of Financial Institutions (OSFI) announced the Minimum Qualifying Rate (MQR) for uninsured mortgages this morning.
OSFI announced that it will make no changes, maintaining the minimum qualifying rate of 5.25% and the floating rate of 2% plus the posted rate previously announced in June 2021. A news release issued by OSFI on the decision states: “in an environment characterised by rising mortgage rates, sustained high inflation and potential risks to borrower income, it is prudent that lenders continue to test borrowers for adverse conditions”.
Mortgages are being tested at much higher rates than the MQR following the Bank of Canada’s recent 50-point increase to the target overnight rate to 4.25% on December 7.
OSFI also stated that a solid margin of safety was in place to ensure that borrowers could keep up with mortgage payments in the event of a negative financial shock such as job loss or reduced income, higher mortgage interest expenses, or higher housing expenses.
OSFI will assess the market impact of its guidance and says it is prepared to make policy changes if necessary.
The next announcement of the overnight rate target is scheduled for January 25, 2023. At the same time, the Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR.
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