\n<\/p>\n
‘We have extraordinary low interest rates, because of the extraordinary circumstances of the pandemic, and extraordinary circumstances require extraordinary measures’ <\/p>\n
Author of the article:<\/p>\n
Geoff Zochodne<\/span> <\/div>\n\nPublishing date:<\/p>\n Apr 09, 2021<\/span> \u00a0\u2022\u00a0 20\u00a0minutes ago<\/span> \u00a0\u2022\u00a0 4 minute read<\/span> \u00a0\u2022\u00a0 <\/svg><\/span> Join the conversation <\/span> <\/div><\/div>\n<\/picture>“You don’t need interest rates to go back by four or five per cent in order to slow down this market … You raise it by one-and-a-half per cent, you basically double mortgage payments for people.”<\/span> Photo by Getty Images<\/span> <\/figcaption><\/figure>\n<\/header>\n\nArticle content<\/h2>\nRock-bottom interest rates that have helped prop up the Canadian economy during the pandemic are also helping fuel frenzied activity in the housing market, putting policymakers and regulators in something of a bind when it comes to what they can \u2014 or should \u2014 do to address the red-hot sector.<\/p>\nHousing prices have been surging in recent months, driven up by a combination of those record low rates, increased household savings and a desire for more space. And while that may be good for owners, it makes for a growing challenge for buyers, who are taking on larger debt burdens that could be harder to handle if rates rise again.<\/p>\nThe situation has led to talk about regulators or policymakers potentially intervening in the housing market, something the Office of the Superintendent of Financial Institutions is now saying it will do.<\/p>\nOSFI on Thursday proposed a new and higher \u201cfloor\u201d for the stress test for mortgages not insured against the borrower defaulting, such as those with a down payment of more than 20 per cent. In doing so, the regulator pointed to the possibility of rising rates as something it considered.<\/p>\n<\/section>\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n\nArticle content<\/h2>\n\u201cWe feel a responsibility to make sure that the financial system is ready in case we have to return to pre-pandemic financial conditions,\u201d Superintendent Jeremy Rudin told reporters on Thursday. \u201cWe have extraordinary low interest rates, because of the extraordinary circumstances of the pandemic, and extraordinary circumstances require extraordinary measures.\u201d<\/p>\n<\/p>\n\n<\/picture>\n Tightening mortgage stress test could have fast impact on housing market, RBC CEO says <\/span><\/h3>\n<\/li>\n<\/picture>\n Rising mortgage rates yet to put a dent in exuberant housing market as policymakers take note <\/span><\/h3>\n<\/li>\n<\/ol>\n<\/section>\nYet OSFI\u2019s mandate is to watch over banks and other federally regulated financial institutions, not to make homes more affordable, which is where the predicament posed by interest rates again arises. The Department of Finance and the Bank of Canada are two other interested parties in the ongoing housing drama, and whether they get off the sidelines in some fashion remains to be seen.<\/p>\nThe Bank of Canada has said it is committed to continuing its buying of federal government bonds \u2014 its quantitative easing program, which helps keep borrowing costs low \u2014 until the economic recovery is well underway. It has also said it will keep its key interest rate at 0.25 per cent until somewhere in 2023, although it is due to update its economic forecast later this month.<\/p>\n\u201cWe have to look at the whole economy,\u201d Bank of Canada Governor Tiff Macklem said in a recent interview with the Financial Post. \u201cThe whole economy needs monetary policy support to support the recovery, get people back to work and get inflation back on target.\u201d<\/p>\n<\/section>\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n\nArticle content<\/h2>\nAny increase in borrowing costs could not only have an effect on debt added during the pandemic but on pre-existing obligations as well, which were accrued when interest rates were historically low and were already considerable for many Canadians consumers.<\/p>\nThat level of debt means the effectiveness of monetary policy has increased, according to Benjamin Tal, deputy chief economist at CIBC Capital Markets. Furthermore, the increased sensitivity may also keep rates from shooting up too high.<\/p>\n\u201cYou don\u2019t need interest rates to go back by four or five per cent in order to slow down this market, because every basis point counts in this environment,\u201d Tal said in an interview. \u201cYou raise it by one-and-a-half per cent, you basically double mortgage payments for people.\u201d<\/p>\nMoreover, OSFI\u2019s stress test is for uninsured mortgages only. Rules for insured mortgages are set by the federal finance minister, which include a stress test for those loans. The insured-mortgage stress test that borrowers must pass is either the borrower\u2019s contract rate or the benchmark rate that is used by OSFI as well, which it is now proposing to replace.<\/p>\nFinance Minister Chrystia Freeland has yet to propose a tweak similar to that of OSFI, although she said in a statement that the federal government would continue to monitor housing-market conditions.<\/p>\n\u201cTo inform potential steps the government may take, we will closely examine the results of the consultation announced by the Superintendent of Financial Institutions,\u201d Freeland added. \u201cThe federal government remains committed to helping all Canadians find an affordable place to call home.\u201d<\/p>\n<\/section>\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n\nArticle content<\/h2>\nTime will also tell how big of a dent OSFI\u2019s stress-test tweak will have on the housing market, if it is enacted.<\/p>\nBoosting the floor for the uninsured-mortgage stress test from its current 4.79 per cent to 5.25 per cent, as OSFI is proposing to do on June 1, would reduce borrower purchasing power by a \u201cmodest\u201d amount of about five per cent, National Bank Financial analyst Jaeme Gloyn wrote in a recent note to clients.<\/p>\n\u201cThe proposal by the financial regulator OSFI, to raise the qualifying rate for uninsured mortgages, is unlikely to weigh on house prices,\u201d wrote Stephen Brown, senior Canada economist at Capital Economics, in a report on Friday. \u201cBut by reducing the share of highly-leveraged borrowers, it should soothe the Bank of Canada\u2019s growing concerns about the negative consequences of low interest rates.\u201d<\/p>\n\u2022 Email: gzochodne@postmedia.com | Twitter: geoffzochodne<\/a><\/em><\/p>\n<\/section>\n\nShare this article in your social network<\/h2>\n<\/section>\n\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div><\/div>\n\n\n\n In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post. <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n\n\n\nTop Stories Newsletter<\/h2>\nSign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.<\/p>\n By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300 <\/small> <\/div>\n\nThanks for signing up!<\/h2>\nA welcome email is on its way. If you don’t see it please check your junk folder.<\/p>\nThe next issue of Top Stories Newsletter will soon be in your inbox.<\/p>\n<\/p><\/div>\n We encountered an issue signing you up. Please try again <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n
Publishing date:<\/p>\n
Apr 09, 2021<\/span> \u00a0\u2022\u00a0 20\u00a0minutes ago<\/span> \u00a0\u2022\u00a0 4 minute read<\/span> \u00a0\u2022\u00a0 <\/svg><\/span> Join the conversation <\/span> <\/div><\/div>\n<\/picture>“You don’t need interest rates to go back by four or five per cent in order to slow down this market … You raise it by one-and-a-half per cent, you basically double mortgage payments for people.”<\/span> Photo by Getty Images<\/span> <\/figcaption><\/figure>\n<\/header>\n\nArticle content<\/h2>\nRock-bottom interest rates that have helped prop up the Canadian economy during the pandemic are also helping fuel frenzied activity in the housing market, putting policymakers and regulators in something of a bind when it comes to what they can \u2014 or should \u2014 do to address the red-hot sector.<\/p>\nHousing prices have been surging in recent months, driven up by a combination of those record low rates, increased household savings and a desire for more space. And while that may be good for owners, it makes for a growing challenge for buyers, who are taking on larger debt burdens that could be harder to handle if rates rise again.<\/p>\nThe situation has led to talk about regulators or policymakers potentially intervening in the housing market, something the Office of the Superintendent of Financial Institutions is now saying it will do.<\/p>\nOSFI on Thursday proposed a new and higher \u201cfloor\u201d for the stress test for mortgages not insured against the borrower defaulting, such as those with a down payment of more than 20 per cent. In doing so, the regulator pointed to the possibility of rising rates as something it considered.<\/p>\n<\/section>\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n\nArticle content<\/h2>\n\u201cWe feel a responsibility to make sure that the financial system is ready in case we have to return to pre-pandemic financial conditions,\u201d Superintendent Jeremy Rudin told reporters on Thursday. \u201cWe have extraordinary low interest rates, because of the extraordinary circumstances of the pandemic, and extraordinary circumstances require extraordinary measures.\u201d<\/p>\n<\/p>\n\n<\/picture>\n Tightening mortgage stress test could have fast impact on housing market, RBC CEO says <\/span><\/h3>\n<\/li>\n<\/picture>\n Rising mortgage rates yet to put a dent in exuberant housing market as policymakers take note <\/span><\/h3>\n<\/li>\n<\/ol>\n<\/section>\nYet OSFI\u2019s mandate is to watch over banks and other federally regulated financial institutions, not to make homes more affordable, which is where the predicament posed by interest rates again arises. The Department of Finance and the Bank of Canada are two other interested parties in the ongoing housing drama, and whether they get off the sidelines in some fashion remains to be seen.<\/p>\nThe Bank of Canada has said it is committed to continuing its buying of federal government bonds \u2014 its quantitative easing program, which helps keep borrowing costs low \u2014 until the economic recovery is well underway. It has also said it will keep its key interest rate at 0.25 per cent until somewhere in 2023, although it is due to update its economic forecast later this month.<\/p>\n\u201cWe have to look at the whole economy,\u201d Bank of Canada Governor Tiff Macklem said in a recent interview with the Financial Post. \u201cThe whole economy needs monetary policy support to support the recovery, get people back to work and get inflation back on target.\u201d<\/p>\n<\/section>\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n\nArticle content<\/h2>\nAny increase in borrowing costs could not only have an effect on debt added during the pandemic but on pre-existing obligations as well, which were accrued when interest rates were historically low and were already considerable for many Canadians consumers.<\/p>\nThat level of debt means the effectiveness of monetary policy has increased, according to Benjamin Tal, deputy chief economist at CIBC Capital Markets. Furthermore, the increased sensitivity may also keep rates from shooting up too high.<\/p>\n\u201cYou don\u2019t need interest rates to go back by four or five per cent in order to slow down this market, because every basis point counts in this environment,\u201d Tal said in an interview. \u201cYou raise it by one-and-a-half per cent, you basically double mortgage payments for people.\u201d<\/p>\nMoreover, OSFI\u2019s stress test is for uninsured mortgages only. Rules for insured mortgages are set by the federal finance minister, which include a stress test for those loans. The insured-mortgage stress test that borrowers must pass is either the borrower\u2019s contract rate or the benchmark rate that is used by OSFI as well, which it is now proposing to replace.<\/p>\nFinance Minister Chrystia Freeland has yet to propose a tweak similar to that of OSFI, although she said in a statement that the federal government would continue to monitor housing-market conditions.<\/p>\n\u201cTo inform potential steps the government may take, we will closely examine the results of the consultation announced by the Superintendent of Financial Institutions,\u201d Freeland added. \u201cThe federal government remains committed to helping all Canadians find an affordable place to call home.\u201d<\/p>\n<\/section>\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n\nArticle content<\/h2>\nTime will also tell how big of a dent OSFI\u2019s stress-test tweak will have on the housing market, if it is enacted.<\/p>\nBoosting the floor for the uninsured-mortgage stress test from its current 4.79 per cent to 5.25 per cent, as OSFI is proposing to do on June 1, would reduce borrower purchasing power by a \u201cmodest\u201d amount of about five per cent, National Bank Financial analyst Jaeme Gloyn wrote in a recent note to clients.<\/p>\n\u201cThe proposal by the financial regulator OSFI, to raise the qualifying rate for uninsured mortgages, is unlikely to weigh on house prices,\u201d wrote Stephen Brown, senior Canada economist at Capital Economics, in a report on Friday. \u201cBut by reducing the share of highly-leveraged borrowers, it should soothe the Bank of Canada\u2019s growing concerns about the negative consequences of low interest rates.\u201d<\/p>\n\u2022 Email: gzochodne@postmedia.com | Twitter: geoffzochodne<\/a><\/em><\/p>\n<\/section>\n\nShare this article in your social network<\/h2>\n<\/section>\n\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div><\/div>\n\n\n\n In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post. <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n\n\n\nTop Stories Newsletter<\/h2>\nSign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.<\/p>\n By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300 <\/small> <\/div>\n\nThanks for signing up!<\/h2>\nA welcome email is on its way. If you don’t see it please check your junk folder.<\/p>\nThe next issue of Top Stories Newsletter will soon be in your inbox.<\/p>\n<\/p><\/div>\n We encountered an issue signing you up. Please try again <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n
Rock-bottom interest rates that have helped prop up the Canadian economy during the pandemic are also helping fuel frenzied activity in the housing market, putting policymakers and regulators in something of a bind when it comes to what they can \u2014 or should \u2014 do to address the red-hot sector.<\/p>\n
Housing prices have been surging in recent months, driven up by a combination of those record low rates, increased household savings and a desire for more space. And while that may be good for owners, it makes for a growing challenge for buyers, who are taking on larger debt burdens that could be harder to handle if rates rise again.<\/p>\n
The situation has led to talk about regulators or policymakers potentially intervening in the housing market, something the Office of the Superintendent of Financial Institutions is now saying it will do.<\/p>\n
OSFI on Thursday proposed a new and higher \u201cfloor\u201d for the stress test for mortgages not insured against the borrower defaulting, such as those with a down payment of more than 20 per cent. In doing so, the regulator pointed to the possibility of rising rates as something it considered.<\/p>\n<\/section>\n
This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n\nArticle content<\/h2>\n\u201cWe feel a responsibility to make sure that the financial system is ready in case we have to return to pre-pandemic financial conditions,\u201d Superintendent Jeremy Rudin told reporters on Thursday. \u201cWe have extraordinary low interest rates, because of the extraordinary circumstances of the pandemic, and extraordinary circumstances require extraordinary measures.\u201d<\/p>\n<\/p>\n\n<\/picture>\n Tightening mortgage stress test could have fast impact on housing market, RBC CEO says <\/span><\/h3>\n<\/li>\n<\/picture>\n Rising mortgage rates yet to put a dent in exuberant housing market as policymakers take note <\/span><\/h3>\n<\/li>\n<\/ol>\n<\/section>\nYet OSFI\u2019s mandate is to watch over banks and other federally regulated financial institutions, not to make homes more affordable, which is where the predicament posed by interest rates again arises. The Department of Finance and the Bank of Canada are two other interested parties in the ongoing housing drama, and whether they get off the sidelines in some fashion remains to be seen.<\/p>\nThe Bank of Canada has said it is committed to continuing its buying of federal government bonds \u2014 its quantitative easing program, which helps keep borrowing costs low \u2014 until the economic recovery is well underway. It has also said it will keep its key interest rate at 0.25 per cent until somewhere in 2023, although it is due to update its economic forecast later this month.<\/p>\n\u201cWe have to look at the whole economy,\u201d Bank of Canada Governor Tiff Macklem said in a recent interview with the Financial Post. \u201cThe whole economy needs monetary policy support to support the recovery, get people back to work and get inflation back on target.\u201d<\/p>\n<\/section>\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n\nArticle content<\/h2>\nAny increase in borrowing costs could not only have an effect on debt added during the pandemic but on pre-existing obligations as well, which were accrued when interest rates were historically low and were already considerable for many Canadians consumers.<\/p>\nThat level of debt means the effectiveness of monetary policy has increased, according to Benjamin Tal, deputy chief economist at CIBC Capital Markets. Furthermore, the increased sensitivity may also keep rates from shooting up too high.<\/p>\n\u201cYou don\u2019t need interest rates to go back by four or five per cent in order to slow down this market, because every basis point counts in this environment,\u201d Tal said in an interview. \u201cYou raise it by one-and-a-half per cent, you basically double mortgage payments for people.\u201d<\/p>\nMoreover, OSFI\u2019s stress test is for uninsured mortgages only. Rules for insured mortgages are set by the federal finance minister, which include a stress test for those loans. The insured-mortgage stress test that borrowers must pass is either the borrower\u2019s contract rate or the benchmark rate that is used by OSFI as well, which it is now proposing to replace.<\/p>\nFinance Minister Chrystia Freeland has yet to propose a tweak similar to that of OSFI, although she said in a statement that the federal government would continue to monitor housing-market conditions.<\/p>\n\u201cTo inform potential steps the government may take, we will closely examine the results of the consultation announced by the Superintendent of Financial Institutions,\u201d Freeland added. \u201cThe federal government remains committed to helping all Canadians find an affordable place to call home.\u201d<\/p>\n<\/section>\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n\nArticle content<\/h2>\nTime will also tell how big of a dent OSFI\u2019s stress-test tweak will have on the housing market, if it is enacted.<\/p>\nBoosting the floor for the uninsured-mortgage stress test from its current 4.79 per cent to 5.25 per cent, as OSFI is proposing to do on June 1, would reduce borrower purchasing power by a \u201cmodest\u201d amount of about five per cent, National Bank Financial analyst Jaeme Gloyn wrote in a recent note to clients.<\/p>\n\u201cThe proposal by the financial regulator OSFI, to raise the qualifying rate for uninsured mortgages, is unlikely to weigh on house prices,\u201d wrote Stephen Brown, senior Canada economist at Capital Economics, in a report on Friday. \u201cBut by reducing the share of highly-leveraged borrowers, it should soothe the Bank of Canada\u2019s growing concerns about the negative consequences of low interest rates.\u201d<\/p>\n\u2022 Email: gzochodne@postmedia.com | Twitter: geoffzochodne<\/a><\/em><\/p>\n<\/section>\n\nShare this article in your social network<\/h2>\n<\/section>\n\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div><\/div>\n\n\n\n In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post. <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n\n\n\nTop Stories Newsletter<\/h2>\nSign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.<\/p>\n By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300 <\/small> <\/div>\n\nThanks for signing up!<\/h2>\nA welcome email is on its way. If you don’t see it please check your junk folder.<\/p>\nThe next issue of Top Stories Newsletter will soon be in your inbox.<\/p>\n<\/p><\/div>\n We encountered an issue signing you up. Please try again <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n
\u201cWe feel a responsibility to make sure that the financial system is ready in case we have to return to pre-pandemic financial conditions,\u201d Superintendent Jeremy Rudin told reporters on Thursday. \u201cWe have extraordinary low interest rates, because of the extraordinary circumstances of the pandemic, and extraordinary circumstances require extraordinary measures.\u201d<\/p>\n<\/p>\n\n<\/picture>\n Tightening mortgage stress test could have fast impact on housing market, RBC CEO says <\/span><\/h3>\n<\/li>\n<\/picture>\n Rising mortgage rates yet to put a dent in exuberant housing market as policymakers take note <\/span><\/h3>\n<\/li>\n<\/ol>\n<\/section>\nYet OSFI\u2019s mandate is to watch over banks and other federally regulated financial institutions, not to make homes more affordable, which is where the predicament posed by interest rates again arises. The Department of Finance and the Bank of Canada are two other interested parties in the ongoing housing drama, and whether they get off the sidelines in some fashion remains to be seen.<\/p>\nThe Bank of Canada has said it is committed to continuing its buying of federal government bonds \u2014 its quantitative easing program, which helps keep borrowing costs low \u2014 until the economic recovery is well underway. It has also said it will keep its key interest rate at 0.25 per cent until somewhere in 2023, although it is due to update its economic forecast later this month.<\/p>\n\u201cWe have to look at the whole economy,\u201d Bank of Canada Governor Tiff Macklem said in a recent interview with the Financial Post. \u201cThe whole economy needs monetary policy support to support the recovery, get people back to work and get inflation back on target.\u201d<\/p>\n<\/section>\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n\nArticle content<\/h2>\nAny increase in borrowing costs could not only have an effect on debt added during the pandemic but on pre-existing obligations as well, which were accrued when interest rates were historically low and were already considerable for many Canadians consumers.<\/p>\nThat level of debt means the effectiveness of monetary policy has increased, according to Benjamin Tal, deputy chief economist at CIBC Capital Markets. Furthermore, the increased sensitivity may also keep rates from shooting up too high.<\/p>\n\u201cYou don\u2019t need interest rates to go back by four or five per cent in order to slow down this market, because every basis point counts in this environment,\u201d Tal said in an interview. \u201cYou raise it by one-and-a-half per cent, you basically double mortgage payments for people.\u201d<\/p>\nMoreover, OSFI\u2019s stress test is for uninsured mortgages only. Rules for insured mortgages are set by the federal finance minister, which include a stress test for those loans. The insured-mortgage stress test that borrowers must pass is either the borrower\u2019s contract rate or the benchmark rate that is used by OSFI as well, which it is now proposing to replace.<\/p>\nFinance Minister Chrystia Freeland has yet to propose a tweak similar to that of OSFI, although she said in a statement that the federal government would continue to monitor housing-market conditions.<\/p>\n\u201cTo inform potential steps the government may take, we will closely examine the results of the consultation announced by the Superintendent of Financial Institutions,\u201d Freeland added. \u201cThe federal government remains committed to helping all Canadians find an affordable place to call home.\u201d<\/p>\n<\/section>\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n\nArticle content<\/h2>\nTime will also tell how big of a dent OSFI\u2019s stress-test tweak will have on the housing market, if it is enacted.<\/p>\nBoosting the floor for the uninsured-mortgage stress test from its current 4.79 per cent to 5.25 per cent, as OSFI is proposing to do on June 1, would reduce borrower purchasing power by a \u201cmodest\u201d amount of about five per cent, National Bank Financial analyst Jaeme Gloyn wrote in a recent note to clients.<\/p>\n\u201cThe proposal by the financial regulator OSFI, to raise the qualifying rate for uninsured mortgages, is unlikely to weigh on house prices,\u201d wrote Stephen Brown, senior Canada economist at Capital Economics, in a report on Friday. \u201cBut by reducing the share of highly-leveraged borrowers, it should soothe the Bank of Canada\u2019s growing concerns about the negative consequences of low interest rates.\u201d<\/p>\n\u2022 Email: gzochodne@postmedia.com | Twitter: geoffzochodne<\/a><\/em><\/p>\n<\/section>\n\nShare this article in your social network<\/h2>\n<\/section>\n\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div><\/div>\n\n\n\n In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post. <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n\n\n\nTop Stories Newsletter<\/h2>\nSign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.<\/p>\n By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300 <\/small> <\/div>\n\nThanks for signing up!<\/h2>\nA welcome email is on its way. If you don’t see it please check your junk folder.<\/p>\nThe next issue of Top Stories Newsletter will soon be in your inbox.<\/p>\n<\/p><\/div>\n We encountered an issue signing you up. Please try again <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n
<\/section>\nYet OSFI\u2019s mandate is to watch over banks and other federally regulated financial institutions, not to make homes more affordable, which is where the predicament posed by interest rates again arises. The Department of Finance and the Bank of Canada are two other interested parties in the ongoing housing drama, and whether they get off the sidelines in some fashion remains to be seen.<\/p>\nThe Bank of Canada has said it is committed to continuing its buying of federal government bonds \u2014 its quantitative easing program, which helps keep borrowing costs low \u2014 until the economic recovery is well underway. It has also said it will keep its key interest rate at 0.25 per cent until somewhere in 2023, although it is due to update its economic forecast later this month.<\/p>\n\u201cWe have to look at the whole economy,\u201d Bank of Canada Governor Tiff Macklem said in a recent interview with the Financial Post. \u201cThe whole economy needs monetary policy support to support the recovery, get people back to work and get inflation back on target.\u201d<\/p>\n<\/section>\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n\nArticle content<\/h2>\nAny increase in borrowing costs could not only have an effect on debt added during the pandemic but on pre-existing obligations as well, which were accrued when interest rates were historically low and were already considerable for many Canadians consumers.<\/p>\nThat level of debt means the effectiveness of monetary policy has increased, according to Benjamin Tal, deputy chief economist at CIBC Capital Markets. Furthermore, the increased sensitivity may also keep rates from shooting up too high.<\/p>\n\u201cYou don\u2019t need interest rates to go back by four or five per cent in order to slow down this market, because every basis point counts in this environment,\u201d Tal said in an interview. \u201cYou raise it by one-and-a-half per cent, you basically double mortgage payments for people.\u201d<\/p>\nMoreover, OSFI\u2019s stress test is for uninsured mortgages only. Rules for insured mortgages are set by the federal finance minister, which include a stress test for those loans. The insured-mortgage stress test that borrowers must pass is either the borrower\u2019s contract rate or the benchmark rate that is used by OSFI as well, which it is now proposing to replace.<\/p>\nFinance Minister Chrystia Freeland has yet to propose a tweak similar to that of OSFI, although she said in a statement that the federal government would continue to monitor housing-market conditions.<\/p>\n\u201cTo inform potential steps the government may take, we will closely examine the results of the consultation announced by the Superintendent of Financial Institutions,\u201d Freeland added. \u201cThe federal government remains committed to helping all Canadians find an affordable place to call home.\u201d<\/p>\n<\/section>\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n\nArticle content<\/h2>\nTime will also tell how big of a dent OSFI\u2019s stress-test tweak will have on the housing market, if it is enacted.<\/p>\nBoosting the floor for the uninsured-mortgage stress test from its current 4.79 per cent to 5.25 per cent, as OSFI is proposing to do on June 1, would reduce borrower purchasing power by a \u201cmodest\u201d amount of about five per cent, National Bank Financial analyst Jaeme Gloyn wrote in a recent note to clients.<\/p>\n\u201cThe proposal by the financial regulator OSFI, to raise the qualifying rate for uninsured mortgages, is unlikely to weigh on house prices,\u201d wrote Stephen Brown, senior Canada economist at Capital Economics, in a report on Friday. \u201cBut by reducing the share of highly-leveraged borrowers, it should soothe the Bank of Canada\u2019s growing concerns about the negative consequences of low interest rates.\u201d<\/p>\n\u2022 Email: gzochodne@postmedia.com | Twitter: geoffzochodne<\/a><\/em><\/p>\n<\/section>\n\nShare this article in your social network<\/h2>\n<\/section>\n\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div><\/div>\n\n\n\n In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post. <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n\n\n\nTop Stories Newsletter<\/h2>\nSign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.<\/p>\n By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300 <\/small> <\/div>\n\nThanks for signing up!<\/h2>\nA welcome email is on its way. If you don’t see it please check your junk folder.<\/p>\nThe next issue of Top Stories Newsletter will soon be in your inbox.<\/p>\n<\/p><\/div>\n We encountered an issue signing you up. Please try again <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n
Yet OSFI\u2019s mandate is to watch over banks and other federally regulated financial institutions, not to make homes more affordable, which is where the predicament posed by interest rates again arises. The Department of Finance and the Bank of Canada are two other interested parties in the ongoing housing drama, and whether they get off the sidelines in some fashion remains to be seen.<\/p>\n
The Bank of Canada has said it is committed to continuing its buying of federal government bonds \u2014 its quantitative easing program, which helps keep borrowing costs low \u2014 until the economic recovery is well underway. It has also said it will keep its key interest rate at 0.25 per cent until somewhere in 2023, although it is due to update its economic forecast later this month.<\/p>\n
\u201cWe have to look at the whole economy,\u201d Bank of Canada Governor Tiff Macklem said in a recent interview with the Financial Post. \u201cThe whole economy needs monetary policy support to support the recovery, get people back to work and get inflation back on target.\u201d<\/p>\n<\/section>\n
This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n\nArticle content<\/h2>\nAny increase in borrowing costs could not only have an effect on debt added during the pandemic but on pre-existing obligations as well, which were accrued when interest rates were historically low and were already considerable for many Canadians consumers.<\/p>\nThat level of debt means the effectiveness of monetary policy has increased, according to Benjamin Tal, deputy chief economist at CIBC Capital Markets. Furthermore, the increased sensitivity may also keep rates from shooting up too high.<\/p>\n\u201cYou don\u2019t need interest rates to go back by four or five per cent in order to slow down this market, because every basis point counts in this environment,\u201d Tal said in an interview. \u201cYou raise it by one-and-a-half per cent, you basically double mortgage payments for people.\u201d<\/p>\nMoreover, OSFI\u2019s stress test is for uninsured mortgages only. Rules for insured mortgages are set by the federal finance minister, which include a stress test for those loans. The insured-mortgage stress test that borrowers must pass is either the borrower\u2019s contract rate or the benchmark rate that is used by OSFI as well, which it is now proposing to replace.<\/p>\nFinance Minister Chrystia Freeland has yet to propose a tweak similar to that of OSFI, although she said in a statement that the federal government would continue to monitor housing-market conditions.<\/p>\n\u201cTo inform potential steps the government may take, we will closely examine the results of the consultation announced by the Superintendent of Financial Institutions,\u201d Freeland added. \u201cThe federal government remains committed to helping all Canadians find an affordable place to call home.\u201d<\/p>\n<\/section>\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n\nArticle content<\/h2>\nTime will also tell how big of a dent OSFI\u2019s stress-test tweak will have on the housing market, if it is enacted.<\/p>\nBoosting the floor for the uninsured-mortgage stress test from its current 4.79 per cent to 5.25 per cent, as OSFI is proposing to do on June 1, would reduce borrower purchasing power by a \u201cmodest\u201d amount of about five per cent, National Bank Financial analyst Jaeme Gloyn wrote in a recent note to clients.<\/p>\n\u201cThe proposal by the financial regulator OSFI, to raise the qualifying rate for uninsured mortgages, is unlikely to weigh on house prices,\u201d wrote Stephen Brown, senior Canada economist at Capital Economics, in a report on Friday. \u201cBut by reducing the share of highly-leveraged borrowers, it should soothe the Bank of Canada\u2019s growing concerns about the negative consequences of low interest rates.\u201d<\/p>\n\u2022 Email: gzochodne@postmedia.com | Twitter: geoffzochodne<\/a><\/em><\/p>\n<\/section>\n\nShare this article in your social network<\/h2>\n<\/section>\n\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div><\/div>\n\n\n\n In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post. <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n\n\n\nTop Stories Newsletter<\/h2>\nSign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.<\/p>\n By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300 <\/small> <\/div>\n\nThanks for signing up!<\/h2>\nA welcome email is on its way. If you don’t see it please check your junk folder.<\/p>\nThe next issue of Top Stories Newsletter will soon be in your inbox.<\/p>\n<\/p><\/div>\n We encountered an issue signing you up. Please try again <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n
Any increase in borrowing costs could not only have an effect on debt added during the pandemic but on pre-existing obligations as well, which were accrued when interest rates were historically low and were already considerable for many Canadians consumers.<\/p>\n
That level of debt means the effectiveness of monetary policy has increased, according to Benjamin Tal, deputy chief economist at CIBC Capital Markets. Furthermore, the increased sensitivity may also keep rates from shooting up too high.<\/p>\n
\u201cYou don\u2019t need interest rates to go back by four or five per cent in order to slow down this market, because every basis point counts in this environment,\u201d Tal said in an interview. \u201cYou raise it by one-and-a-half per cent, you basically double mortgage payments for people.\u201d<\/p>\n
Moreover, OSFI\u2019s stress test is for uninsured mortgages only. Rules for insured mortgages are set by the federal finance minister, which include a stress test for those loans. The insured-mortgage stress test that borrowers must pass is either the borrower\u2019s contract rate or the benchmark rate that is used by OSFI as well, which it is now proposing to replace.<\/p>\n
Finance Minister Chrystia Freeland has yet to propose a tweak similar to that of OSFI, although she said in a statement that the federal government would continue to monitor housing-market conditions.<\/p>\n
\u201cTo inform potential steps the government may take, we will closely examine the results of the consultation announced by the Superintendent of Financial Institutions,\u201d Freeland added. \u201cThe federal government remains committed to helping all Canadians find an affordable place to call home.\u201d<\/p>\n<\/section>\n
This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n\nArticle content<\/h2>\nTime will also tell how big of a dent OSFI\u2019s stress-test tweak will have on the housing market, if it is enacted.<\/p>\nBoosting the floor for the uninsured-mortgage stress test from its current 4.79 per cent to 5.25 per cent, as OSFI is proposing to do on June 1, would reduce borrower purchasing power by a \u201cmodest\u201d amount of about five per cent, National Bank Financial analyst Jaeme Gloyn wrote in a recent note to clients.<\/p>\n\u201cThe proposal by the financial regulator OSFI, to raise the qualifying rate for uninsured mortgages, is unlikely to weigh on house prices,\u201d wrote Stephen Brown, senior Canada economist at Capital Economics, in a report on Friday. \u201cBut by reducing the share of highly-leveraged borrowers, it should soothe the Bank of Canada\u2019s growing concerns about the negative consequences of low interest rates.\u201d<\/p>\n\u2022 Email: gzochodne@postmedia.com | Twitter: geoffzochodne<\/a><\/em><\/p>\n<\/section>\n\nShare this article in your social network<\/h2>\n<\/section>\n\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div><\/div>\n\n\n\n In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post. <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n\n\n\nTop Stories Newsletter<\/h2>\nSign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.<\/p>\n By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300 <\/small> <\/div>\n\nThanks for signing up!<\/h2>\nA welcome email is on its way. If you don’t see it please check your junk folder.<\/p>\nThe next issue of Top Stories Newsletter will soon be in your inbox.<\/p>\n<\/p><\/div>\n We encountered an issue signing you up. Please try again <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n
Time will also tell how big of a dent OSFI\u2019s stress-test tweak will have on the housing market, if it is enacted.<\/p>\n
Boosting the floor for the uninsured-mortgage stress test from its current 4.79 per cent to 5.25 per cent, as OSFI is proposing to do on June 1, would reduce borrower purchasing power by a \u201cmodest\u201d amount of about five per cent, National Bank Financial analyst Jaeme Gloyn wrote in a recent note to clients.<\/p>\n
\u201cThe proposal by the financial regulator OSFI, to raise the qualifying rate for uninsured mortgages, is unlikely to weigh on house prices,\u201d wrote Stephen Brown, senior Canada economist at Capital Economics, in a report on Friday. \u201cBut by reducing the share of highly-leveraged borrowers, it should soothe the Bank of Canada\u2019s growing concerns about the negative consequences of low interest rates.\u201d<\/p>\n
\u2022 Email: gzochodne@postmedia.com | Twitter: geoffzochodne<\/a><\/em><\/p>\n<\/section>\n\nShare this article in your social network<\/h2>\n<\/section>\n\n\n\nAdvertisement<\/h2>\n\n\n\n This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div><\/div>\n\n\n\n In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post. <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n\n\n\nTop Stories Newsletter<\/h2>\nSign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.<\/p>\n By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300 <\/small> <\/div>\n\nThanks for signing up!<\/h2>\nA welcome email is on its way. If you don’t see it please check your junk folder.<\/p>\nThe next issue of Top Stories Newsletter will soon be in your inbox.<\/p>\n<\/p><\/div>\n We encountered an issue signing you up. Please try again <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n
This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div><\/div>\n
In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post. <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n
Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.<\/p>\n
A welcome email is on its way. If you don’t see it please check your junk folder.<\/p>\n
The next issue of Top Stories Newsletter will soon be in your inbox.<\/p>\n<\/p><\/div>\n
We encountered an issue signing you up. Please try again <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n