Real estate secured lending

Real estate secured lending, including mortgage insurance, is a core business activity of many of the institutions that we regulate. This critical function supports a sound housing finance system in Canada.

Monitoring risk

Risks in the Canadian housing and residential mortgage markets can impact financial stability. We monitor risk trends to understand how they might affect the lenders and mortgage insurers that we supervise.

We study potential impacts to assess the effectiveness of our work. This analysis supports our regulatory guidance development and supervisory risk assessments, including capital requirements and the minimum qualifying rate.

Read our latest Annual Risk Outlook for more insight on top risks.

Managing risk

A primary risk we expect mortgage lenders to manage is credit risk. This is the risk of financial loss caused by a borrower’s failure to meet their obligations to the lender, including loan repayment.

We expect lenders to manage credit and other lending risks:

  • During the underwriting stage: when lenders grant loans to borrowers
  • During the account management stage: throughout the life of the loan

Guideline B-20 sets out our expectations for prudent residential mortgage underwriting for lenders.

Mortgage insurers provide mortgage default insurance to lenders. This is required when the down payment on a property is less than 20% of the home purchase price. We expect mortgage insurers to manage the risk of financial loss from a lender's claim, after any recoveries (for example, from sale of the property).

Did you know? Government-backed mortgage default insurance must also meet the requirements under the Government of Canada’s legislative framework for mortgage insurance.

Guideline B-21 sets out our expectations for prudent residential mortgage insurance underwriting and related activities for mortgage insurers.

Preserving financial stability

We regulate and supervise lenders and insurers to make sure they effectively manage the risk of financial loss. This helps to support a well-functioning residential mortgage market and prevent widespread losses across the financial system. This in turn reduces risks to the broader Canadian financial system and contributes to financial stability.