Canada’s banking regulator is limiting the number of highly leveraged loans in the banks’ residential mortgage portfolios, which have ballooned alongside rising prices to make Canadian borrowers among the most highly indebted in the world.
The Office of the Superintendent of Financial Institutions (OSFI) has told lenders they will have to limit loans to borrowers with mortgages greater than 4.5 times their annual income, according to two sources familiar with the matter. The Globe and Mail is not identifying the sources because they are not authorized to speak publicly about the measures.
The new income limit, which is expected to take effect in the first quarter of next year, comes on top of other existing mortgage qualification rules, including the stress test that requires borrowers to be able to pay their mortgages if interest rates are two percentage points higher than the…
