Office of the Superintendent of Financial Institutions
For immediate release
OTTAWA ─ December 15, 2022 ─ Office of the Superintendent of Financial Institutions
Today, the Office of the Superintendent of Financial Institutions (OSFI) announced that the minimum qualifying rate (MQR) for uninsured mortgages will remain the greater of the mortgage contract rate plus 2 per cent or 5.25 per cent.
Uninsured mortgages are residential mortgages with a down payment of 20 per cent or more. OSFI makes decisions on the MQR for uninsured mortgages based on data from its ongoing monitoring of federally regulated financial institutions, as well as a range of vulnerability indicators which include Canadian housing market and broader macroeconomic data. OSFI also consults its federal financial regulatory partners, notably the Department of Finance Canada and the Bank of Canada, when setting the MQR.
In January, OSFI will launch a review of Guideline B-20. This review will include the MQR, which forms part of B-20, but will also progressively include other mortgage underwriting standards. We expect to leave the MQR at its current rate pending the outcome of the review, although the economic environment could result in a more immediate change.
Sound mortgage underwriting includes a margin of safety that ensures borrowers will have the ability to make mortgage payments in the event of negative financial shocks, such as a reduction in income, an increase in mortgage interest rates or related housing expenses. In an environment characterized by rising mortgage interest rates, sustained high inflation and potential risks to borrower income, it is prudent that lenders continue to test borrowers for adverse conditions. OSFI will continue to evaluate the impact of its guidance and policy tools and is prepared to make changes at any time if conditions warrant.
“In times of economic uncertainty with increasing vulnerabilities, the MQR has and continues to be a key tool supporting sound mortgage underwriting.”– Tolga Yalkin, Assistant Superintendent – Policy, Innovation and Stakeholder Affairs
“In times of economic uncertainty with increasing vulnerabilities, the MQR has and continues to be a key tool supporting sound mortgage underwriting.”
– Tolga Yalkin, Assistant Superintendent – Policy, Innovation and Stakeholder Affairs
OSFI – Media Relations
Office of the Superintendent of Financial Institutions (OSFI) is an independent agency of the Government of Canada, established in 1987, to protect depositors, policyholders, financial institution creditors and pension plan members, while allowing financial institutions to compete and take reasonable risks. OSFI supervises more than 400 federally regulated financial institutions and 1,200 pension plans to determine whether they are in sound financial condition and meeting their prudential requirements.