Brokers are likely breathing a sigh of relief following OSFI’s release of its B-21 guidelines Monday, with one of the only major changes being the office of the superintendent recommending stricter down payment requirements.
“Where non-traditional sources of down payment are being used, further consideration should be given to establishing greater risk mitigation and/or additional premiums to compensate for greater risk,” the B-21 draft guidelines state. “Incentive and rebate payments (i.e. “cash back”) should not be considered part of the down payment.”
The news followed months of speculation that had brokers worrying about the potential effects of the guidelines.
“This time the insurers are said to be the target and this could mean anything from increasing the down payment amount to a minimum of 10 per cent or 15 per cent, affecting mostly first-time buyers, to limitations on bulk insurance which is bound to affect almost everyone else,” Lior Hershkovitz of Mortgage Edge told MortgageBrokerNews.ca in January. “With the banks required to hold a greater portion of the risk on their books, mortgage approvals will become more stringent."
And while the new down payment guidelines may have an effect on a small number of borrowers, some brokers believe the B-21 guidelines – unlike the much-maligned B-20 – are a step in the right direction.
“So basically, people need to start doing their jobs,” Paolo Di Petta of Di Petta Mortgages said in the comments section of MortgageBrokerNews.ca. “Sounds a lot like common sense. The real question is why this wasn't happening any sooner?”
Brokers apprehensive about potential B-21
OSFI releases B-21 draft