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HISTORY OF MORTGAGE RULE CHANGES

2008 - July

Amortization Reduction

The maximum amortization period is shortened from 40 years to 35 years. 

Minimum Down Payment

The requirements for a 5% minimum down payment is established. 

New Loan Documentation Standards

New minimum documentation requirements are introduced. Lenders are required to ensure sufficient evidence of a property’s value and the borrower’s sources and level of income. 

Establishment of a Minimum Credit Score

The new rules establish a credit score floor of 620, but allow for some limited exceptions. 

(Department of Finance)

2011 - January

Reduction of Insured Refinancing

The maximum amount for insured refinances is reduced to 85% from 90%.

Amortization Reduction

The maximum amortization period is shortened to 30 years from 35 years on insured mortgages.

(Department of Finance)

2012 - June

Reduction of Insured Refinancing

The maximum amount for insured refinances is reduced to 80% from 85%.

Mortgage Insurance Restrction

The government announces mortgages of more than $1 million are no longer eligible to be default-insured.

Amortization Reduction

The maximum amortization period is shortened to 25 years from 30 years on insured mortgages.

Minimum Credit Scores

New gross debt service (GDS) and total debt service (TDS) limits of 39% and 44%, respectively, are implemented for borrowers with a credit score of 680+.

(OSFI)

2014 - January

Insurance Changes

CMHC announces it will start paying a risk fee of 3.25% of all insurance premiums written, as well as 0.10% of bulk, portfolio, and low-LTV insurance premiums.

(CMHC)

2016 - February

Minimum Down Payment Changes

The government announces that for homes priced above $500,000, a 10% down payment is required for the portion of the mortgage above the half-million mark. 

(Department of Finance)

2016 - September

OSFI Capital Requirement Changes

OSFI releases its draft advisory regarding revised capital requirements for mortgage insurers, which came into effect January 1, 2017. The new requirements increased the amount of capital required to be held by mortgage insurers due to more drivers involved in the required capital formula. Some of the key determinants of the new capital requirements are:
* LTV and type of mortgage
* Credit score
* How long it has been since the credit score was last pulled
* The likelihood of a borrower’s credit score moving materially up or down
* Amortization period
* How long the mortgage insurance policy has been in force
* Which region the underlying home is located

(OSFI)

2017 - January

CMHC Fee Increases

New OSFI Capital Requirements for Federally Regulated Mortgage Insurers takes effect January 1. Soon after, CMHC announces premium price increases for borrowers with down payments between 5% and 25%, effective March 17, 2017. These mortgage insurance price increases reflect OSFI’s significantly higher capital requirements for mortgage insurers. The price changes represented an approximate 12%–15% increase to high-LTV mortgage insurance. Genworth MI Canada and Canada Guaranty followed suit and matched CMHC’s price increases.

(CMHC)

2017 - October

OSFI Announces Final B-20 Guidelines

OSFI unveils its final B-20 guidelines regarding residential mortgage underwriting practices and procedures for federally regulated financial institutions. It includes a new stress test that would require potential borrowers to qualify for underwriting using the higher of their contracted mortgage rate + 200 bps or the 5-year benchmark fixed rate published by the Bank of Canada.

As part of OSFI’s final B-20 guidelines, federally regulated financial institutions are disallowed from arranging (or appearing to arrange) a mortgage or combination of mortgages secured by the same property that would circumvent the maximum LTV ratio as defined in a lender’s underwriting policies or legal requirements.

Finally, OSFI’s new B-20 guidelines introduce greater due diligence, including: intended use of loan (e.g., purchase, refinancing), type of purchase (owner-occupied, recreational, investment, etc.), and type of refinancing (if applicable).

(OSFI)

2010 - February

Reduction of Insured Refinancing

The maximum amount for insured refinancing is reduced to 90% from 95%. 

Qualification Change for Terms Under 5 Years

Variable and fixed rate mortgages with terms less than 5 years are required to be qualified using the 5-year posted rate/qualifying rate.

Rental Property Down Payments

A 20% down payment is implemented for small rental properties. 

(Department of Finance)

2011 - April

HELOC Insurance Removal

Home Equity Lines of Credit (HELOCs) no longer qualify for government mortgage insurance.

(Department of Finance)

2013 - August

Securitization Changes

CHMC introduces a new allocation procedure for market NHA-MBS. Issuers are required to file quarterly allocation requests as the new procedure is determined quarterly based on available capacity for new guarantees.

(CHMC)

Securitization Changes

CHMC announces that federally regulated lenders who securitize mortgages to third-party investors will be granted off-balance sheet treatment. This allows OSFI-regulated lenders to increase their organization capacity.

(OSFI)

2015 - December

CMHC Changes to Securitization Program

CMHC announces changes to its securitization programs (NHA-MBS and Canada Mortgage Bond):
 * For 2016 CMHC increased the amount of mortgages it will provide its guarantee of timely payment of interest and principal on insured mortgages to $145B, up from $120B in 2015.
 *CMHC also increased government guarantee fees under the NHA-MBS and CMB programs.

(CMHC)

2016 - April

OSFI Capital Requirement Changes

OSFI releases proposed changes to its regulatory capital requirements for mortgages. The new requirements introduce risk-sensitive floors on capital for mortgages and apply to new originations, renewals and refinances.

(OSFI)

2016 - October

Mortgage Qualification Change

All high-ratio insured mortgages must now be stress tested using the 5-year posted rate (qualification rate).

Elimination of low-LTV Insurance for Certain Mortgages

The Government of Canada eliminates the availability of low-LTV insurance for certain types of mortgages (e.g., borrowers taking equity out of their home; mortgages with amortization periods over 25 years; home purchase prices over $1 million; borrowers with credit scores under 600; investment properties, etc.). Low-LTV mortgages must also meet the same eligibility requirements as high-LTV mortgages.

Capital Gains Exemption

The government introduces a principal residence capital gains exemption. Any individual who was not a resident in Canada in the year the property was acquired will no longer be able to claim the exemption. Effective October 2, 2016, taxpayers claiming the exemption must also file the claim through the CRA (previously documents were only produced if audited).

Mortgage Insurer-Lender Risk Sharing Exploration

The government launches a public consultation on the potential to introduce some form of mortgage insurer-lender risk sharing. A consultation paper was released in late October 2016.

(Department of Finance)

2017 - April

CMHC Introduces New Fee

CMHC introduces a 0.01% administration fee that will be assessed against a portion of an issuer’s unused NHA-MBS guarantee allocations beyond a specified threshold.

(CMHC)

2018 - January

New Stress Test Begins

OSFI’s uninsured mortgage stress test begins.

(OSFI)

OSFI Logo

Office of the Superintendent of Financial Institutions (OSFI)

OSFI supervises and regulates federally registered banks and insurers, trust and loan companies, as well as private pension plans subject to federal oversight.

Canada

Department of Finance

The Department helps the Government of Canada develop and implement strong and sustainable economic, fiscal, tax, social, security, international and financial sector policies and programs.

CMHC

Canada Mortgage and Housing Corporation

Canada Mortgage and Housing Corporation is a Crown Corporation of the Government of Canada. (CMHC) is Canada’s national housing agency.