OSFI proposes changes to manage mortgage risks, preserving access for Canadians

News release - Ottawa -

Today, the Office of the Superintendent of Financial Institutions (OSFI) announced a consultation for feedback on proposed changes to the Capital Adequacy Requirements (CAR) and Mortgage Insurer Capital Adequacy Test (MICAT) guidelines. These changes will help banks and mortgage insurers address risks related to mortgages in negative amortization, where payments are insufficient to cover the interest portion.

For lenders, these changes will mean holding more capital that aligns with the increased risk of mortgages in negative amortization with a loan-to-value ratio (LTV) above 65% – that is, the outstanding balance is 65% or more of the value of the collateral. The proposed changes should encourage banks to lessen the number of mortgages that would otherwise go into negative amortization.

For mortgage insurers, the maximum LTV ratio for an individual mortgage in the MICAT capital formula will increase from 100% to 105%. This change aligns the MICAT capital formula with the maximum permitted LTV ratio for insured mortgages.

For consumers who have a current mortgage term, these changes will not lead to an increase in monthly payments.

OSFI’s goal with these proposed changes is to make sure banks and mortgage insurers are managing risks effectively. 

Comments can be submitted to Consultations@osfi-bsif.gc.ca by September 1, 2023.

“We have proposed capital requirements to ensure banks and mortgage insurers have adequate capital buffers to absorb risks that arise when mortgages fall into negative amortization. We believe these incremental changes add necessary resilience to Canada’s mortgage finance system.”

- Peter Routledge, Superintendent of Financial Institutions

Quick facts

  • OSFI’s CAR guideline provides a framework for assessing the capital adequacy of banks, bank holding companies, and federally regulated trust and loan companies. 
  • OSFI first released the MICAT guideline on January 1, 2019. In developing the guideline, OSFI simplified the calculation of insurance risk and streamlined the requirements for single-family residential mortgages.
  • OSFI’s MICAT guideline applies to Canadian mortgage insurance companies.


OSFI – Media Relations