Kindred condo mississauga . Canadian loans have tightened! The details of the new loan rules will take effect in 10 days. Right after the Bank of Canada changed its previous Buddhist tone and explicitly warned of the Canadian real estate bubble.Please Visit: Kindred condo mississauga to Get Your VVIP Registration Today!
On May 20th OSFI (The Office of the Superintendent of Financial Institutions), Canada’s financial regulator, also announced stricter lending rules.
In the face of months of housing boom and soaring house prices, OSFI announced in April that it would significantly tighten stress test standards and implement stricter new rules from June 1.
After more than a month of communication with major lending financial institutions, OSFI defined the rules for the implementation of more stringent stress tests. On May 20th, OSFI made it clear that it would be implemented from June 1st.
According to OSFI’s new rules, from June 1st, the standard for stress tests on uninsured mortgage (uninsured mortgages) is to increase the current interest rate by 2 percentage points, or at least 5.25% as the starting point, with the larger number as the standard.
In addition, OSFI announced a proposal to review the criteria for stress tests at least once a year to ensure that they are applicable to risks in the lending environment.
In the post, OSFI pointed out that how to make the Canadian economy recover safely and smoothly after the epidemic is a test for Canada’s financial system. The current frenzied environment in the Canadian real estate market makes lenders more likely to face greater financial risks. Therefore, OSFI will take measures to improve the stress test standards to ensure the healthy development of the Canadian financial system.
According to the online calculator of the loan information website Rate Hub, a household’s annual income of C $100000, 20% down payment, a 5-year fixed interest rate of 1.78%, and a 30-year repayment cycle are calculated:
According to the current stress test standard of 4.79%, the total amount of loans that the family can apply for after the stress test is 651000.
According to the 5.25% of the new rules after June 1, the total amount of loans that the family can apply for after the stress test is 618000.
Therefore, many financial institutions believe that OSFI’s so-called stricter lending measures have little impact on the current cooling of the real estate market.
After OSFI announced the details of the new policy, Canadian Federal Finance Minister Fang Huilan Chrystia Freeland said insured mortgages would also be affected by the new stress test rules.
Before the release of the new rule, the Bank of Canada announced that it had changed its previous Buddhist painting style and warned of the crisis of the Canadian housing bubble.
The surge in household debt caused by the Canadian housing bubble will become the most dangerous part of the Canadian economy, the central bank governor said in a report released on May 20.
This growing imbalance between household debt and the real estate market not only poses a threat to Canadian families, but also makes the entire economic environment extremely risky and vulnerable.
Since the second half of 2020, Canada’s loan-to-household income ratio (loan-to-income ratio) has exceeded 450 per cent.
That figure is already higher than the craziest phase of the housing market in 2016-2017, when loan stress tests introduced by Canadian federal financial institutions cooled the market because of the overheating of the housing market.
