OSFI’s view on blanket appraisals and appraisal timing
Date: July 17, 2025
The Office of the Superintendent of Financial Institutions (OSFI) is aware of blanket appraisals obtained during pre-construction that may predate the mortgage origination by a significant amount of time. The purpose of this backgrounder is to clarify the issue, risks, and OSFI’s expectations of federally regulated financial institutions (“institution”).
A blanket appraisal occurs when the value of multiple units is appraised at one time. Blanket appraisals can be efficient in certain situations. For example, for a builder with several similar units, the appraisal value may be the same for each.
The key prudential concern with this practice is the mismatch in timing between the blanket appraisal and the value of the property at the time the mortgage closes. A significant time lapse between the valuation date and the mortgage origination, which is more likely to occur with new build condo purchases, can result in outdated contract values or appraisals. If these properties subsequently decline in value and collateral on the property is realized, it could lead to higher financial loss for the institution. Also, if it results in uninsured mortgage loans that exceed 80% of the market value of the property at the time of the loan origination, this would not align with legislative requirements.
From a prudential perspective, blanket appraisals do not affect a significant portion of mortgage loans in Canada. The pre-construction condo market represents a small subset of Canadian residential real estate: Between 2022 and 2024, 1.2% of mortgage originations were to purchase newly built condos. As of February 2025, 1.4% of all outstanding mortgages were used to fund newly built condo purchases. For this data, we collect real estate secured lending data from institutions on an ongoing basis. We also use external data sources on the Canadian mortgage market to understand trends and risks.
Prudential risk arises when outdated appraisals are layered with the mortgage lending risks highlighted in our Annual Risk Outlook, including those associated with urban condo markets and/or with variable rate mortgages with fixed payments.
OSFI’s response
We expect institutions to establish policies ensuring timely, realistic, and substantiated valuations, in accordance with Principle 4 of Guideline B-20: Residential mortgage underwriting practices and procedures, to accurately reflect the property’s current value. These policies should specify minimum expectations for recency, frequency, and robustness of appraisal assessments. They should also include more intensive action required in higher-risk situations. Any valuation, whether based on a blanket appraisal or otherwise, that did not reflect the current price level at the time of mortgage origination would not meet these expectations.
When we see lending practices that may be inconsistent with our expectations or applicable law, we act to clarify our expectations with institutions so that they can take corrective action. Find out more about our response to financial institution's risks and the monitoring of remediation activity.