New Mortgage Rules Will Have Little Impact on Toronto Housing Market

The Toronto real estate commuity is happy with the results of the new rules for mortgage insurers that Canada's finacial regulator put into place to dampen activity in the Toronto Market. Local Real Estate Agents were extremely happy the new regulations will do little to slow the rising condo and home market in the Toronto Area.

The new regulations, came out earlier this week, have been under development for almost two years. At that time  the financial regulator, the Office of the Superintendent of Financial Institutions, was extremely concerned about the over heated Toronto Condo Market and what impact any correction would have on the national real estate market as well as the economy.

After the condo market slowed the regulations, which are referred to as B-20, had over-reaching goals that indicated exactly what banks need to do for the OSFI to see that they were properly scanning potential homebuyers before issuing loans ad mortgages.

The new regulation called  B-20 also set a limit on exactly what homeowners could fianance on a home equity line of credit at 65 per cent of the assessed home value.


OSFI deputy superintendent Mark Zelmer has indicated that the new guidelines should ave a limited cooling effect on the Toronto Housing Market. The new rules were actually writte more for the mortgage insurance companies, than the Chartered Banks.

The new regulations spell out what all Canadian mortgage insurance providers need to ensure as  they do not want to take on too much risk. So as such the mortgage insurance companies will now be responsible for ensuring the good faith of the loans made by the Chartered Banks.

The concept is for the mortgage insurance backers to adhere to practices which will minimize bad loans through the banks that they ensure. In so doing the full set of rules could have a tightening effect, but industry players say any such impact will be small.