{"id":8293,"date":"2024-11-21T09:43:34","date_gmt":"2024-11-21T09:43:34","guid":{"rendered":"https:\/\/finderica.com\/osfis-stress-test-on-mortgage-switches-ends-tomorrow-what-you-need-to-know\/"},"modified":"2024-11-21T09:43:34","modified_gmt":"2024-11-21T09:43:34","slug":"osfis-stress-test-on-mortgage-switches-ends-tomorrow-what-you-need-to-know","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=8293","title":{"rendered":"OSFI’s stress test on mortgage switches ends tomorrow: What you need to know"},"content":{"rendered":"
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Devon Ajram, Vice-President and National Director of TD\u2019s Broker Services, acknowledged that the change is a \u201cmassive win\u201d for consumers. However, he also doesn\u2019t believe there will be significant outflows of clients from one lender to another as lenders work hard to keep those clients.<\/p>\n

\u201cI think the lenders who have got meaningful portfolios to potentially lose are going to be quite astute about what they need to do to try and retain that business,\u201d he said during the lender panel at Mortgage Professionals Canada\u2019s National Mortgage conference in Montreal.<\/p>\n

He added that roughly three quarters of outstanding loans are comprised of conventional, or uninsured, mortgages, and that those mortgage holders are typically less prone to financial stress and therefore less likely to make the leap to another lender.<\/p>\n

\u201cBut I certainly do think that lenders will have to think about sharpening their pencil a little bit, certainly when it comes to renewals,\u201d he acknowledged, particularly monoline lenders who don\u2019t have deeper relationships with clients by way of multiple products. \u201cBecause consumers will have that option to move around if they want to.\u201d<\/p>\n

Manulife President and CEO Katy Boshart agreed, saying lenders will also have to up their game when it comes to customer service if they hope to retain those clients who now have more freedom to shop around.<\/p>\n

\u201cI think it puts the onus on us as lenders to create the right experiences for our customers,\u201d she said. \u201cIt\u2019s not always about [the best] rate.\u201d<\/p>\n

Tracy Gomes, Senior VP, Real Estate Secured Lending at Scotiabank, added that the move is \u201cgreat for the client to not feel like they\u2019re being trapped at their own institution,\u201d and are now able to more freely shop around.<\/p>\n

She confirmed that no further details had been provided by OSFI at of late October, and that lenders would be looking to OSFI\u2019s Nov. 21 quarterly update for further details.<\/p>\n

First National CEO Jason Ellis suggested that media claims of borrowers being trapped at their existing lender due to the stress test were \u201cwildly overstated.\u201d<\/p>\n

\u201cOptically, it\u2019s good that the borrowers now have that flexibility, but I don\u2019t think it changes a lot,\u201d he said. However, he did add that \u201cwe are going to throw ourselves on swords to keep our borrowers.\u201c<\/em><\/p>\n

Is OSFI likely to scrap the stress test entirely?<\/h2>\n

There has been speculation that this change is just one step towards the eventual removal of the mortgage stress test altogether, especially given its diminishing relevance in today\u2019s falling-rate environment.<\/p>\n

John Webster, former CEO of Scotia Mortgage Authority, predicts that the stress test will be eliminated entirely within the next 12 months.<\/p>\n

He points out that with OSFI\u2019s new loan-to-income (LTI) limits for highly indebted borrowers coming into effect in Q1 2025, the two measures will likely run concurrently for about a year before the stress test is phased out.<\/p>\n

\u201cThere\u2019s no rationale for the stress test in this interest rate environment,\u201d he said during a recent public appearance. \u201cModeling that was done by the previous superintendent was based on a rising interest rate environment, not this environment. So I don\u2019t think there\u2019s any rationale for it.<\/em>\u201c<\/p>\n

If this were to happen, it would mirror what occurred in the UK, where the introduction of an LTI cap was followed by the eventual removal of their mortgage stress test.<\/p>\n

However, not everyone in the industry shares the same optimism. Mortgage expert Ron Butler of Butler Mortgage told CMT, \u201cMaybe, but I\u2019ll believe it when I see it.\u201d<\/p>\n<\/p><\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Devon Ajram, Vice-President and National Director of TD\u2019s Broker Services, acknowledged that the change is a \u201cmassive win\u201d for consumers. However, he also doesn\u2019t believe there will be significant outflows of clients from one lender to another as lenders work hard to keep those clients. \u201cI think the lenders who have got meaningful portfolios to<\/p>\n","protected":false},"author":1,"featured_media":8294,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[216],"tags":[1616,417,2835,939,2836,745,2837],"class_list":{"0":"post-8293","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-mortgage","8":"tag-ends","9":"tag-mortgage","10":"tag-osfis","11":"tag-stress","12":"tag-switches","13":"tag-test","14":"tag-tomorrow"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/8293","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8293"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/8293\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/8294"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8293"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8293"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8293"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}