policy
06. policy The current policy flavour of the day is one of unwinding Covid-era programs intended to aggressively promote expansion and growth, including shrinking monthly federal deficits and a reduction in Q uantitative Easing. That said, there are a couple of recently introduced policy changes that are worth sharing.
THE OSFI MAKES IT HARDER TO QUALIFY Canada’s banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), raised the minimum qualifying rate for uninsured mortgages on June 1st, 2021. This means that effective that date, home buyers with at least a 20% down payment would need to qualify for their mortgage at their contract rate plus 2 percentage points or 5.25% (up from 4.79%), whichever is higher. This type of change is intended to reduce banking risk in the face of what could be rising interest rates, as it ensures that borrowers can afford to service their debt at higher interest rates than they are currently enjoying.
At the margin this makes it more restrictive for some buyers, reducing the amount they can borrow and pair with their downpayment and thus reducing the maximum purchase price, all else being equal. The overall impact of this change on the market was not directly perceptible, at least in the Vancouver Region: sales in June 2021 were in fact down for the 3rd straight month, though the 5,952 MLS sales were the most any June going back to 2017.
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