20 Mar COVID-19: what is on hold?
The situation created by COVID-19 is rapidly changing and new information is being delivered on a daily basis. Amid all the changes happening at the social, medical and government levels, some news that had been introduced in the month of February have now changed or been placed on hold until further notice.
The first one was the planned change and review of the mortgage stress test. This change is no longer a priority for the Canadian government due to the coronavirus crisis. Until the outbreak, the Office of the Superintendent of Financial Institutions (OSFI) had announced that it was considering a new benchmark rate to determine the minimum qualifying rate for uninsured mortgages. OSFI’s mortgage underwriting guideline (B-20) sets the minimum qualifying rate for uninsured mortgages.
As of now, OSFI said that, in unison with other government agencies, it was focusing on ensuring the resilience of Canadian financial institutions and the financial system. However, with this announcement it’s not just the review for uninsured mortgages that are affected. The minister of finance also announced the suspension of the April 6, 2020 coming into force of the new benchmark rate used to determine the minimum qualifying rate for insured mortgages.
Another change that was introduced, as a consequence of the above mentioned, and in order to ensure that Canadian financial institutions have enough liquidity to continue lending, OSFI has also cut its buffer requirements. The Domestic Stability Buffer, which large financial institutions are required to maintain in case of financial crisis, was due to be 2.25% as of the end of April 2020 but this has been cut to 1% immediately and remain in place for at least 18 months.
As we continue to work from home, we are still connected and you may contact us if you have any questions regarding this or any other topic.