Jessica Brandon-Jepp, Advocacy and Government Relations Advisor, Canadian Credit Union Association
On Monday June 10, the Office of the Superintendent of Financial Institutions (OSFI) posted a Guideline B-20 Information Sheet to its website. The document provides information on OSFI’s role in maintaining a safe and sound Canadian financial system, includes a brief history of the guideline, and reports on some of the impacts the revised Guideline B-20 has had on Canada’s uninsured mortgage market.
In 2012, OSFI introduced its Residential Mortgage Underwriting Practices and Procedures Guideline (Guideline B-20) to set out expectations for strong residential mortgage underwriting for federally regulated lenders. The original guideline was mostly principles-based and included an expectation that lenders would stress test borrowers for adverse conditions.
In 2016, OSFI reminded lenders of its underwriting expectations in the form of a public letter. OSFI issued an update to B-20 in 2017 that came into effect in January 2018.
Based on data sourced from uninsured mortgages from the top 19 federally regulated mortgage lenders – which includes few credit unions - OSFI states that:
Mortgage underwriting quality is improving;
Rates at renewal are stable;
Amortization periods not extending.
These findings are not surprising as OSFI, the Bank of Canada and CMHC have all publicly stated that they feel B-20 is working as intended.
CCUA will continue to work with regulators and credit unions to ensure that there is an accurate understanding of the high quality of credit unions’ mortgage lending practices.