OSFI plans new mortgage rules changes, but postpones Basel III reforms to Q2 2023

The Office of the Superintendent of Financial Institutions (OSFI) said it could implement stricter mortgage market rules during the next few weeks.

OSFI decided to postpone final introduction of the Basel III reforms by one quarter.

According to its recent letter to the industry, the federal banking regulator shifts the implementation of the final Basel III reforms to the second quarter of 2023.

In addition to it, the new rules for disclosure, capital and liquidity for small banks are also postponed to the same timeframe.

Another delay from OSFI concerns the revisions of the liquidity adequacy requirements – it’s postponed to April 1, 2023.

“Such dates changes will give institutions the necessary time to cope with the systems changes for following the guidance revisions,” – the regulator noted.

Moreover, OSFI also determined its policy approach to certain issues that were pointed out during industry consultations. They include capital, leverage and liquidity guidance.

According to the agency, such measures will add to the previous steps, for instance, a mortgage stress test.

“Certain observers have reasonably noted that the burden of the minimum qualifying rate lies unevenly on first-time homebuyers. It’s true, it increases the already heavy burden of large down payments required by high real estate prices,” – OSFI admitted. “However, it’s not a reasonable solution to sacrifice this margin of safety, especially with the near-term and long-term risks faced by the national mortgage market.”

The main threat in this case is today’s supply and demand imbalance in the real estate segment, OSFI added.

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