Thursday, October 16, 2025

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OSFI On Easing Mortgage Underwriting Standards: “We Will Not Do That”

Amid the calls to loosen mortgage-underwriting standards in Canada, the Office of the Superintendent of Financial Institutions (OSFI) has resolved that it will not be considering such a proposal.

“The uncertainty and anxiety caused by the rising interest rate environment have understandably caused some Canadians to advocate for the loosening of the underwriting standards in Guideline B-20,” said OSFI Superintendent Peter Routledge. “Let me reassure those of you who oppose a loosening of underwriting standards that OSFI will not do that.”

The Guideline B-20, introduced by OSFI in 2017, set rules in tightening qualifications for uninsured mortgages. Routledge added that it was fortunate the guidelines had a provision that required institutions to stress-test potential mortgage borrowers at higher interest rates.

Instead, the OSFI is focused on reviewing its Pillar 2 Capital Framework, looking at risks not yet covered by the Domestic Stability Buffer or the Pillar 1 Capital Requirements.

“While OSFI can always act to increase capital and leverage requirements commensurate with an institution’s individual risk profile, our review is intended to improve transparency and predictability around OSFI’s Pillar 2 Capital Framework and ensure that it remains fit for purpose given our intensifying risk environment,” he added.

The call to ease on the rules is being pushed by some groups in response to the ballooning mortgage prices caused by the recent hikes in interest rates. This contributed to a drop in home sales, with Mattamy Homes–one of Canada’s biggest builders–reportedly closing down some of its sales centers.

On Wednesday, the Bank of Canada raised borrowing costs anew with a 75-basis point increase ending with an overnight rate at 3.25%, warning “that the policy interest rate will need to rise further” as inflation spikes.

The Canada Mortgage and Housing Corporation in July predicted that the country could face a ‘mild recession‘ should interest rates reach the restrictive territory of 3.5%.


Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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