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Canadian financial regulatory agency launched a new mortgage loan test

Canadian financial regulatory agency launched a new mortgage loan test

[The Epoch Times, March 26, 2024] (Reported by the Epoch Times reporter Zhou Xingthe Toronto) The Canadian CBRC (OSFI) a new mortgage loan test is designed to ensure that the loan is free from too many high debt borrowers.risk.The new measures are different from the existing mortgage application pressure test and will not affect individuals immediately.

The new investment portfolio test launched by the Banking Regulatory Bureau will monitor the ratio of the loan loan amount to income per quarter to ensure that among the borrowers without insurance mortgage loans, the loan with a loan with an income ratio of more than 4.5 does not exceed the specified threshold valueEssence

According to the CBRC, the new investment portfolio test aims to “prevent the increase in high leverage loans during low interest rates.”Loans with a loan amount of 4.5 times income have attracted particular attention because they will increase the possibility of borrowers’ breach of contract, thereby increasing the potential losses of the lender.

“Financial Post” explained in a column article that the new investment portfolio test will not obtain loan manufacturing obstacles to the applicant.This measure is not right, only for loan institutions.

Robert Mclister, a mortgage strategist, said that if the applicant’s loan amount exceeds 4.5 times the income, the bank can still agree to the loan according to the new test, provided that the average loan of the entire investment portfolio of the bank isThe amount to the income ratio does not exceed 4.5.

In addition, as referred to by the CBRC, the loan with a ratio of more than 4.5 does not exceed a threshold value.The threshold value currently considers is 25%.

McLeist said that the new test will not immediately have a big impact.However, once interest rates begin to decline, more people will pass pressure testing and obtain loans. The ratio of loans to income may increase.

The current situation is that according to the consulting documents issued by the CBRC in January 2023, with the rise in house prices, a non -insurance mortgage loan with a high loan amount and income ratio has climbed to an average of more than 30%.McLister said that the proportion has been rapidly declining and is currently only 12.55%.The average loan amount and income ratio of borrower without insurance are currently 2.6 times.

As for the bank’s response to the new test, McLIST said that some banks may charge additional fees to some people with high income ratios to help reduce risks.Because additional charges will reduce the number of such borrowers.

He said that generally, banks hope that such a higher risk borrower is a higher quality and more profitable customers.As for some debt borrowers, they may be forced to transfer to non -federal regulatory financial institutions for loans.

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