The changes are part of the B20 regulations introduced by the Office of the Superintendent of Financial Institutions (OSFI), Canada's national banking regulator. The main change to note is that cashback down payments will no longer be allowed in mortgages subject to the B20 regulations. This means that for any mortgage obtained after this date, the borrower will not be able to use a cash-back payment as part of the down payment.
The article argues that this change is unlikely to have a significant effect on borrowers or lenders. Though initially lenders may be hesitant to provide mortgages without cashback down payments, borrowers will still be able to take advantage of the same rates and benefits available before the new regulations come into effect. These include low interest rates, flexible repayment options, and the ability to lock in rates. Furthermore, the article argues that there is no expected long term impact of the regulation changes as the process of obtaining a mortgage will remain largely unchanged.
The article also notes that the new regulations provide some potential benefits to buyers. These include the fact that the borrower will not be paying more than the actual cost of the property and the increased amount of money held back in reserve will improve the security of the loan. Additionally, it is hoped that the changes to the regulations will help to increase transparency in the mortgage market, ensuring that borrowers are well informed of the costs associated with any loan they may obtain.
Overall, the article provides a comprehensive overview of the upcoming changes to the Canadian Mortgage Market. It discusses the impact of the regulatory changes and suggestions that the effect will largely be positive for borrowers. Even though cashback down payments will no longer be allowed, buyers will still be able to take advantage of the same rates and flexibilities as before and it will help to increase transparency in the mortgage market.
This article was contributed on Sep 21, 2023
