Canadian real estate is probably fine, but the bank regulator just wants your lender to be extra safe. Earlier today, the Office of the Superintendent of Financial Institutions (OSFI) sent an advisory on real estate secured lending (RESL). OSFI, who oversees federally-regulated financial institutions (FRFIs), clarified expectations for risky mortgages. Lenders have been asked to pay extra attention to the loan size in relation to home values. This comes after the OSFI head warned a housing crash is possible, which would leave borrowers with less equity. Less equity means more leverage, and higher risk for mortgage lenders.
Loan-To-Values and Guideline B-20
Today you’ll need to know two key terms to understand the impact, with the first being loan-to-value (LTV). The LTV is the size of the loan represented as a percent of the value of the asset used to secure the loan, in today’s…
