The Canadian banking regulator, OSFI, is implementing measures to restrict highly leveraged loans in banks’ residential mortgage portfolios, aiming to curb excessive borrower debt. Under the new rule, lenders will need to limit mortgages exceeding 4.5 times the borrower’s annual income, with some flexibility for high-cost cities like Toronto and Vancouver. This regulation, effective next year, aims to mitigate default risks during low-interest rate periods. While it may make it harder for some borrowers to secure large mortgages, it’s part of broader efforts to strengthen lending standards and stabilize the housing market.

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