The Globe and Mail published this article a few weeks back about proposed new rules from the Office of the Superintendent of Financial Institutions regarding refinances and new mortgages. Essentially, the Office is proposing that banks be required to take a much closer look a a home’s value and a borrower’s ability to repay a mortgage before lending money.
The primary target is secured lines of credit, because these allow homeowners to load up their properties with consumer debt after the mortgage is registered. Because of the rapidly approaching spring rush in real estate, most of Canada’s major banks have cut their rates. This move by the Office is likely happening now because of those slashed rates, in an attempt to rein in the market.
It remains to be seen if any changes will take effect.