The mortgage and real estate industry has been quick to react to the updated mortgage lending guidelines known as B-20 which have been published by OSFI.

The rules come into effect from January 1, 2018 and will include a stress test on uninsured mortgages at 2% above the agreed contract rate.

Reacting to the update, James Laird, co-founder of and president of CanWise Financial said: “Those of us working in the mortgage industry question if now is an appropriate time to introduce more regulation which will cool markets across the country further.”

He added that the impact of previous policy changes designed to cool the housing market and tighten mortgage lending have still to be assessed.

RBC economist Robert Hogue said that, although the changes are not a surprise, they will have a real impact on the market.

“We expect that, following a brief run-up in activity fueled by buyers rushing to lock-in existing qualifying criteria, the change will have a dampening impact on the housing market shortly after it comes into effect in January. It has the potential initially to rock the market because non-insured mortgages represent a large share of the mortgage market,” Hogue wrote.

Ontario Real Estate Association CEO Tim Hudak said that the province has borne the brunt of government interventions and believes that the stress test for mortgages is regulation overkill.

“It’s time for governments to hit the brakes on more demand side policy interventions and take a wait and see approach. Ontario’s housing market is too important to the provincial economy to move ahead with unnecessary regulation that will hurt the dream of home ownership,” he said.

First National Financial issued a statement saying that although it is not a Federally Regulated Financial Institution, the nature of its operations and commitment to the highest quality underwriting standards will require it to follow the Guideline.

It said that the stress test on uninsured mortgages to 2% above the contract rate will have a significant impact.

“The Company believes all mortgage lenders, including First National, will see a decrease in conventional single-family market activity levels as a result of this change,” it warned.

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