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OSFI Won't Loosen Mortgage Standards

CANADA
  • Bloomberg reports that Peter Routledge says Canada's main banking industry OSFI won’t bow to pressure to loosen mortgage-underwriting standards in response to rising interest rates that are boosting homebuying costs.
  • One of its top priorities is intensifying its focus on residential mortgage-underwriting standards. OSFI in 2017 introduced a package of rules, known as Guideline B-20, that tightened qualification for uninsured mortgages.
  • This comes as the BoC yesterday showed no concerns around declining housing activity "With higher mortgage rates, the housing market is pulling back as anticipated, following unsustainable growth during the pandemic".
  • It remains to be seen whether one view that the BoC will see lower terminal rates than the Fed because of Canada's higher household debt will play out.

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