Bracing for B20

While usually resilient, how will the industry adapt to the rule changes this time?

Bracing for B20
Theories abound, the impact of OSFI’s B20 guidelines still aren’t clear—but that isn’t stopping industry players from conceiving probable scenarios behind the scenes in an effort to brace themselves.

Borrowers will, without a doubt, have more difficulty qualifying for favourable rates, and that’s compelling the industry to start thinking outside the box, says John Bourassa, vice president of sales and marketing at Equity Financial Trust.

“The impact of B20, for many of us, still remains unclear, but I think every management team of every company is working hard to create assumptions around what we think the impact is going to be,” he said. “I think everybody is striving to ensure they bring some innovation to the table to help borrowers in our space meet the credit requirements regulators have imposed.”

Much has been written about the underwriting rule changes, and Equity Financial Trust has been quietly conducting its own due diligence to determine their severity, but Bourassa believes educated borrowers will help the industry weather this latest storm.

“We’ve done an impact analysis of what this change is going to cost,” said Bourassa. “We’re going to rely on our own innovation and we’re going to consult mortgage brokers on the basis of what they feel these consumers need, and I think the good mortgage brokers out there will provide the guidance that these people need to adapt to these regulatory changes.”

The mortgage industry has proven resilient in the past, especially during OSFI’s previous regulation changes in October of last year, however, it may need to band closer together come January 1.

“When you’re a mortgage lender that uses the mortgage broker channel exclusively, you rely on the expertise of the front line, and that’s been an element of our success in the past and we’ll continue to leverage it in the future,” said Bourassa.

“The more regulatory changes that come in, the more complicated it becomes and the more the waters get a little muddied, but I think the advice that is dispensed by mortgage professionals in the mortgage broker community becomes invaluable. They showed this time last year that they got a greater share, and I believe it will be the case again this year.”

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