MPAC Delivers Nearly 900,000 Property Assessment Notices Across Ontario

The Municipal Property Assessment Corporation (MPAC) will begin mailing nearly 900,000 Property Assessment Notices to property owners across Ontario to reflect changes in assessment that have taken place over the last year.

While 2017 is not a province-wide Assessment Update year, MPAC continues to review properties and is legislatively responsible for updating property information in order to return an accurate Assessment Roll for 2018 taxation.

This year, property owners will receive a Notice from MPAC if there has been:

  • change to property ownership, legal description, or school support;
  • change to the property’s value resulting from a Request for Reconsideration, an Assessment Review Board decision, or ongoing property reviews;
  • property value increase/decrease reflecting a change to the property; for example, a new structure, addition, or removal of an old structure; or
  • change in the classification or tax liability of the property.

“Assessing all properties in a fair and consistent way matters to us because we know how important this information is to the communities we serve,” said Rose McLean, MPAC President and Chief Administrative Officer. “The Property Assessment Notices we begin mailing today will help ensure property information is accurately reflected on municipal assessment rolls.”

MPAC encourages property owners who receive a Notice this year to login to by using the Roll Number and unique Access Key on their Notice. provides easy access to the information MPAC has on file for a property and can help owners compare their assessment to others in their area.

Property owners who receive a 2017 Property Assessment Notice and disagree with their assessment have until April 2, 2018 to submit a Request for Reconsideration (RfR) with MPAC – free of charge. For greater convenience, RfRs can also be filed directly through

Quick Facts

  • In 2016, every property owner in Ontario received a Property Assessment Notice as the result of a province-wide Assessment Update, reflecting a January 1, 2016 valuation date. The 2016 assessed value will be the basis for property taxes for the 2017-2020 property tax years.
  • MPAC continues to review and update property assessment information in non-Assessment Update years. Properties change ownership, new homes or additions are built, structures are removed or demolished and properties change use. Notices are mailed each year to reflect these changes.
  • In 2017, MPAC delivered more than $37 billion in taxable assessment growth to municipalities across Ontario.

About MPAC

The Municipal Property Assessment Corporation (MPAC) is an independent, not-for-profit corporation funded by all Ontario municipalities, accountable to the Province, municipalities and property taxpayers through its 13-member Board of Directors. Our role is to accurately assess and classify all properties in Ontario in compliance with the Assessment Act and regulations set by the Government of Ontario. We are the largest assessment jurisdiction in North America, assessing and classifying more than five million properties with an estimated total value of $2.4 trillion.

MPAC’s province-wide Assessment Updates of property values have met international standards of accuracy. Our assessors are trained experts in the field of valuation and apply appraisal industry standards and best practices. Our assessments and data are also used by banks, insurance companies and the real estate industry.

For more information about 2017 Property Assessment Notices mailed this fall, visit

SOURCE Municipal Property Assessment Corporation

Bank of Canada’s Poloz – Three Things Keeping Me Awake at Night

Canadian Club Toronto
Toronto, Ontario


The holiday season is traditionally a time to reflect on the events of the past year, and to look ahead at what may be in store for next year. Speaking from an economic perspective, I think we can look back at 2017 with considerable satisfaction. And 2018 is looking positive, too.

The Canadian economy is on pace for about 3 per cent growth in 2017, which would be the strongest among the Group of Seven economies. Most sectors and regions are now participating. Over 350,000 full-time jobs have been created so far this year, and wages have recently shown signs of picking up. This is supporting robust consumer spending.

Exports and business investment have long been the laggards in our recovery story. Encouragingly, though, business investment has grown for the past three quarters in a row. As well, the government’s infrastructure program is becoming increasingly evident in the data. In contrast, exports have not been stellar. They started the year strong, but faltered during the summer. Nevertheless, the most recent data show a broad-based upturn, supporting our forecast that—after looking through all the noise—exports will continue to be pulled along by rising foreign demand.

That brings me to inflation, our policy anchor. Inflation spent the year within our
1 to 3 per cent target band, although it has tended to fall a little short of the 2 per cent midpoint. We did a lot of work this year to satisfy ourselves that our fundamental understanding of inflation remains valid. It does, once you take account of short-term effects in the data.

I have talked before about the process of bringing the economy back home—at the intersection of full capacity and 2 per cent inflation. Our return home was made even longer by the detour we took when oil prices collapsed back in 2014. But, today, we find ourselves quite close to home, and getting closer, with the economy now running close to full output and inflation expected to be around 2 per cent later in 2018.

That is all good. But as an economist, and as a central banker, I find myself preoccupied with a number of slower-moving, nagging issues that I expect will be with us for a long time. They keep me awake at night because I wonder if we have done all we can to address them. I have chosen three of these things to talk about today.

These personal preoccupations are a little different from the more pressing, immediate risks to the economy that economists usually think about. I can assure you that the Bank is fully engaged on a wide range of such issues, from the effects of technology on inflation to uncertainty over the future of the North American Free Trade Agreement (NAFTA) and the response of housing demand to mortgage rule changes, to cite just a few.

I am not trying to spoil everyone’s holiday cheer with my topic today. Rather, I have found over the years that issues that appear daunting often become less so when we understand them better. What is more, a better understanding of the issues helps everyone—from the various government authorities to the public at large—determine what should be done to resolve them.

So, with that, let me share with you three things that are keeping me awake at night, and bring you up to date on developments surrounding them.

Cyber Threats

The first issue I want to touch on is the potential for a cyber attack that leads to a major disruption of our financial system.

People take for granted the efficiency and convenience of today’s financial system, as they should. It was not all that long ago that your choices for making a retail purchase were a personal cheque, a credit card or cash—and cash was an option only if you remembered to get to your bank branch before it closed. Today, e-commerce is pervasive. People can have electronic access to their accounts instantly, almost anywhere. The infrastructure that underpins our financial system is a public good, every bit as important to the health of Canada’s economy as our roads, bridges and airports.

I am not exaggerating. Every day, Canada’s major payments systems process millions of transactions, large and small, and billions of dollars change hands. These transactions happen so routinely and with such accuracy that it is easy to overlook how critical these systems are. The process looks completely risk-free, but it is not. And to be without these systems for any length of time could have a significant impact on the economy.

Our financial system is as good as it is today because of major advances in communications and financial technology, and a high degree of connectivity between institutions. However, this connectivity also creates a vulnerability. It means that a problem in one institution may spread to others and be amplified. As such, a successful cyber attack on one institution can become a successful attack on many. These attacks can be launched from anywhere and spread across global networks.

The good news is that all the major participants in the financial system are taking this threat very seriously. They are collaborating with each other by sharing information and best practices. As for the key payments systems that connect everyone together, the Bank of Canada has the legislative authority to oversee them and to ensure that they follow strong risk-management practices, including those aimed at preventing cyber attacks. We are also collaborating with partners in the federal government who are working to ensure that Canada is resilient to cyber threats.

However, we cannot assume that our financial system is immune, despite best-in-class cyber defences. We need to be prepared to recover our systems should a cyber attack succeed. The Bank is working closely with our financial institutions and payments systems to ensure that we have robust joint recovery plans in place. Further, the Bank is making significant investments in its own operational redundancies, increasing the resilience of our systems and our people. It is vital that we be able to “fail over” quickly so our key functions will be maintained in the event of a major disruption, be it a cyber attack, natural disaster or some other crisis. This is a matter not just of operational continuity, but of maintaining confidence in our financial system in stressed situations.

The bottom line is that I am confident that we are doing everything we can on this issue. Still, the system may be only as robust as its weakest link, and that keeps me thinking.

High House Prices and Household Debt

My second preoccupation is the state of Canada’s housing markets and the associated level of household debt. The Bank said in last month’s Financial System Review that these vulnerabilities are showing early signs of prospective easing, which is good. However, these vulnerabilities are elevated, and are likely to remain so for a long time. Remember, it took years for these vulnerabilities to build up in the first place.

It is not just the amount of debt; it is also its composition and distribution. More than 80 per cent of household debt is composed of mortgages and home equity lines of credit (HELOCs). Increasingly, mortgages are being combined with HELOCs, to the point where about 40 per cent of all housing-backed loans are blended with a HELOC component.

HELOCs have been a very convenient tool for many households. They give borrowers flexibility to finance renovation projects or handle emergencies—such as when your furnace dies on a cold February night. Their popularity shows how useful these lending arrangements are. However, there are some potential risks that borrowers need to manage.

HELOCs usually allow the borrower to pay only the interest on the loan each month, leaving the principal amount unchanged. Indeed, about 40 per cent of HELOC borrowers are not regularly paying down their principal, which means that debt loads may persist longer than in the past. Furthermore, some may be using their HELOC to speculate—for example, to fund a down payment on a second house with the intention of flipping it. Given the potential for volatility in house prices and for higher interest rates, such activity may be adding to the overall vulnerability of the system.

We have seen several rounds of macroprudential measures to tighten mortgage finance rules. These include measures last year that were aimed at high-ratio mortgages—those where the down payment is less than 20 per cent of the value of the home. Since then, there has been a sharp drop in the number of highly indebted Canadians obtaining these mortgages—and by highly-indebted we have in mind people with a ratio of debt to income that is more than 450 per cent. But we have also seen an increase in low-ratio mortgages with risky characteristics, such as extended amortization periods. New lending guidelines for low-ratio mortgages, which will come into effect next year, should work to limit the number of low-ratio mortgages going to highly indebted households.

These mortgage rule changes will help build up the resilience of the financial system over time, as each new mortgage will be stress-tested to ensure that the borrower can manage a higher interest rate at renewal time. It is important to remember that the purpose of these rule changes is not to control house prices. Ultimately, the laws of supply and demand will determine the direction of house prices.

At the same time, there is little doubt that these rule changes will mean less growth in our housing sector. In the wake of the global financial crisis, ultra-low interest rates have helped our economies weather the storm, but an important by-product has been exceptional growth in housing. For some time now we have been expecting a rotation away from housing and toward other engines of growth, such as exports and investment. We are seeing signs of that fundamental rotation now.

A key issue for the Bank, then, is understanding how people will react when they are told that, under the new rules, they do not qualify for the mortgage they would like. Staff examined data from new mortgages issued last year by federally regulated lenders. They found that about 10 per cent of low-ratio mortgages—around 36,000 loans, representing about $15 billion worth of borrowing—would not have qualified last year under the new stress test.

Of course, there is more than one way for people to respond. The most likely response is for people to look for a less-expensive house with a smaller mortgage so they qualify under the new rules. Others might try to boost their down payment, or delay the purchase until they can do so.

But people might also look for a lender that is not bound by these new mortgage rules so they can avoid facing the stress test. No doubt, certain non-federally regulated lenders will step up to compete for that business, although other regulators may choose to impose the same guidelines. In any event, to those people who hope to avoid the rules, I offer this advice: testing yourself to make sure you could handle your mortgage payments if interest rates were higher at renewal is a very good idea, whether it is a rule or not.

One final issue related to indebtedness—we expect that high levels of debt will make the economy as a whole more sensitive to higher interest rates today than in the past. This issue has obvious implications for monetary policy, so we have done a lot of work this year to enhance our models to capture it. As we said in our October Monetary Policy Report and in our interest rate announcement last week, this is one of the key issues we will be monitoring in real time as we consider the appropriate path for interest rates.

The Tough Job Market for Young People

My third long-term preoccupation is the state of our labour market; specifically, how hard it has been for so many young people to find work. I mentioned earlier that more than 350,000 full-time jobs had been created this year. However, only about 50,000 of those have gone to young workers.

A decade ago, the proportion of people aged 15 to 24 participating in the workforce peaked at almost 68 per cent. That figure hit a trough earlier this year at nearly five percentage points lower—the lowest in almost 20 years. If we could return the youth participation rate to its level before the global financial crisis, more than 100,000 additional young Canadians would have jobs.

Of course, this is not only a problem for youth. We know of people in all age groups who are working part-time when they would prefer a full-time job. We also know people who cannot find jobs that match their skill set and are underemployed. And we know there are people who have lost the job they held for years when their factory closed, and have faced extreme difficulty in finding new work in a similar field. These are all serious concerns. But I want to concentrate on young people, for whom a long period of unemployment can leave a scar that could last a lifetime.

I know there are legitimate explanations for why more young Canadians are staying out of the labour force. Enrolment in post-secondary schooling has increased in recent years, and we expect some of this rise will be permanent. Some of these youth are looking to gain the skills that will match what employers are demanding. There are more than 250,000 job vacancies in the economy today, the highest on record. Canadian business leaders say that most of these vacancies are unfilled because they cannot find workers with the right skills.

Let me suggest that responsibility for addressing this skill mismatch rests with all of us, not just the students and the education system. There surely is room for more ambitious on-the-job training programs in this picture.

This issue is taking on greater urgency because the economy is reaching the stage where more-efficient job matching and increased workforce engagement will be our main means of building economic capacity. With more economic capacity comes the opportunity for more non-inflationary growth and a permanently higher level of Canadian GDP, and more income for everyone. Clearly, that is something worth having.

Let me elaborate. Right now, we are at a point in the economic cycle that I think of as the “sweet spot.” We know that a majority of Canadian companies are running flat out. They may have been hesitating to invest in new capacity until now, perhaps because of lingering economic uncertainty, or concerns over the future of NAFTA, for example. But, despite these uncertainties, companies are moving to expand their capacity now, which augurs well for the future.

Most expansions of capacity have two elements—more capital equipment, and more people. Attracting the right people to new jobs may require higher wages, and this in turn can cause people to re-enter the workforce. We may be seeing early signs of this happening. I mentioned earlier that measures of wages have turned higher over the past couple of months and, in November, the participation rate for young people jumped back to more than 64 per cent. These are encouraging signs, but it will take awhile before they become trends.

The Bank is watching these indicators very carefully at the moment, for they will help us manage the risks that monetary policy faces at this point in the business cycle. Our current policy setting clearly remains quite stimulative. With the economy operating near potential, a mechanical approach to policy would suggest that monetary policy should already be less stimulative. However, as we said in last week’s interest rate announcement, we still see signs of ongoing, albeit diminishing, slack in the labour market.

Fundamentally, this is an exercise in risk management. The facts that the economy is operating near its capacity, and that growth is forecast to continue to run above potential, together pose an upside risk to our inflation forecast. At the same time, our belief that there remains some slack in the labour market poses a downside risk to our inflation forecast. Given the unusual factors at play, the Bank is monitoring these risks in real time—the term we use for this is “data dependent”—rather than taking a mechanical approach to policy setting.

And One More Thing…

So there we have it, three preoccupations that are keeping me awake at night. I could give you even more, but these are my top three, and you do not have all afternoon.

Actually, there is one more thing keeping me awake at night, which perhaps I should mention, and that is all the noise I keep hearing about cryptocurrencies, especially Bitcoin. There is a lot of hype around Bitcoin, and markets are evolving quickly to allow wider access, including to retail investors. So perhaps you will allow me to make a couple of points.

To begin with basics, the term “cryptocurrency” is a misnomer—“crypto,” yes, but “currency,” no. For something to be considered a currency, it must act as a reliable store of value, and you should be able to spend it easily. These instruments possess neither of these characteristics, so they do not constitute “money.”

So, what are cryptocurrencies, exactly? Characteristics vary widely but, generally speaking, they can be thought of as securities. The Canada Revenue Agency agrees. That means, if you buy and sell them at a profit, you have income that needs to be reported for tax purposes. What their true value is may be anyone’s guess—perhaps the most one can say is that buying these things means buying risk, which makes it closer to gambling than investing.

To be absolutely clear, I am not giving investment advice. I never do. All I will say to people intending to buy a so-called cryptocurrency is that you should read the fine print and make sure you know what you are getting into. The Bank of Canada does not regulate these instruments and their markets, just as we do not regulate traditional securities and their markets.

But one question that does preoccupy me is, what does the arrival of cryptocurrencies mean for the cash in your pocket? Supplying the Canadian dollars you need to carry out your business is one of the Bank’s most important mandates.

It is often forgotten that the cash provided by a central bank is the only truly risk-free means of payment. With cash, buyers and sellers can be certain that payment is final. This is an absolutely vital public good, which has always been provided by the central bank. All other payment types, from debit cards to credit cards to cheques, work through intermediaries in the financial system. Yes, of course, they are safe. But, fundamentally, they can never be quite as risk-free as cash. Just ask yourself—if you were concerned that an imminent cyber attack was about to hit the financial system, would you not want to carry some extra cash until everything was back to normal?

Nonetheless, it is natural that transactions using electronic payments, such as debit and credit cards, continue to grow in volume and value relative to cash. It is certainly possible that the demand for digital cash could grow over time. If so, there could be very strong arguments for the central bank to provide it, given its obligation to fulfill the public good function. Bank staff are exploring the circumstances under which it might be appropriate for the central bank to issue its own digital currency for retail transactions. All central banks are researching this. We will have more to say about the subject in the months ahead.


Now I am ready to conclude. Cyber threats, elevated household debt, youth underemployment—these are all long-term issues that will continue to be major preoccupations for myself personally, and for the Bank of Canada.

I hope I have not spoiled your festive, pre-holiday mood by talking about my preoccupations. In case I have, let me repeat that the economy has made tremendous progress over the past year, and it is close to reaching its full potential. We are very encouraged by this, and we are growing increasingly confident that the economy will need less monetary stimulus over time.

Nevertheless, a number of uncertainties remain around our outlook, many of which I have touched on today. As Senior Deputy Governor Carolyn Wilkins said in an important speech last month, it is critical that we take these uncertainties on board in our policy-making. So, allow me to repeat what we said in our interest rate announcement last week: We will continue to be cautious in our upcoming policy decisions, guided by incoming data in assessing the economy’s sensitivity to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.

By sharing my preoccupations with you today, I hope that I have also raised your understanding of them, so that they appear somewhat less daunting. The Bank will continue to work on these issues while doing our part to help bring about a strong and stable economy. This has been the Bank of Canada’s role since our beginning. And it will remain our role for years to come.

Let me wish you all the best for the holidays, and for a prosperous 2018.

Termination of the First National Mortgage Investment Fund

Stone Asset Management Limited (the “Manager”), the manager of First National Mortgage Investment Fund (the “Fund”) (TSX: FNM.UN), in consultation with the Fund’s promoter and mortgage advisor, First National Financial LP, has determined, in accordance with the terms of the Fund’s declaration of trust, to terminate the Fund on or about December 19, 2017. Unitholders are not required to take any action.

The Fund was initially created to provide unitholders with exposure to an actively managed, diversified portfolio (the “Portfolio”) of mortgages. The Fund obtains exposure to the Portfolio through the use of a forward purchase and sale agreement (the “Forward Agreement”) which is to expire pursuant to its terms on December 19, 2017 (the “Forward Termination Date”).

Under the transitional provisions of tax rules enacted by the Canadian federal government in December 2013, the favourable tax treatment for the Forward Agreement will expire no later than the Forward Termination Date. Following the Forward Termination Date, it will no longer be possible for the Fund to provide its unitholders with exposure to the Portfolio on the originally intended tax-advantaged basis. The Forward Agreement is integral to the structure of the Fund and its investment objectives.

As a result of the upcoming Forward Termination Date, loss of the intended favourable tax treatment and reduction in the size of the Fund’s assets as a result of redemptions over the past number of years, the Manager has determined to terminate the Fund on or about the Forward Termination Date. Pursuant to the terms of the Fund’s declaration of trust, the Manager, as trustee of the Fund, has the right to terminate the Fund without unitholder approval in circumstances in which continued operation is no longer economically practical.

As part of the termination, First National Financial LP has agreed in principle to purchase the portfolio of mortgages held by FN Mortgage Investment Trust (the “Trust”) prior to the Forward Termination Date at fair market value, allowing the Trust to liquidate the Portfolio and to allow the Fund to distribute cash to the unitholders of the Fund on its termination. The Fund`s independent review committee assessed the transactions and provided a recommendation that, in the committee’s opinion after reasonable inquiry, the proposed transactions achieve a fair and reasonable result for the Trust , the Fund and its unitholders.

Unitholder Distributions

Prior to the termination of the Fund, the Fund will pay to its unitholders a special distribution in an amount necessary to eliminate the Fund’s liability for non-refundable income tax under Part I of the Income Tax Act (Canada), if any. The distribution will be paid in units which will be automatically consolidated immediately after the distribution. Thereafter, after paying, or providing for, all liabilities and obligations of the Fund, all Fund property, being cash, will be distributed to the unitholders of the Fund on a pro rata basis. Following such distribution, the Fund will terminate.

The Fund intends to distribute one final monthly cash distribution in the amount of $.05 per unit on or about December 15 to unitholders of record November 30, 2017 for the period from November 1 to November 30.

The Manager will apply to delist the units of the Fund from the Toronto Stock Exchange. It is expected that the units will be delisted at the close of trading on or about December 15, 2017.

Following the settlement of the Forward Agreement, the Manager will also terminate FN Mortgage Investment Trust.

About First National Mortgage Investment Fund
The Fund was designed to provide unitholders with tax-advantaged monthly distributions by investing in Canadian mortgage loans originated by First National Financial LP. For more information, visit the Fund’s website at:

About First National Financial Corporation
First National Financial Corporation (TSX: FN, TSX: FN.PR.A, TSX: FN.PR.B) is the parent company of First National Financial LP, a Canadian-based originator, underwriter and servicer of predominantly prime residential (single-family and multi-unit) and commercial mortgages. With more than $100 billion in mortgages under administration, First National is Canada’s largest non-bank originator and underwriter of mortgages and is among the top three in market share in the mortgage broker distribution channel.  For more information, please visit

About Stone Asset Management Limited
Stone Asset Management Limited (“SAM”) manages the Fund.  Established in 1999, SAM is an independent, Canadian-owned asset management company that specializes in structuring and managing high quality investment products. Its professionals are well regarded in the Canadian investment community for their disciplined investment process. The Fund’s daily unit price can be found at:

Unitholder Information
For further information, unitholders may contact their Financial Advisors or Stone Client Services at 1 800 795 1142 or As noted, unitholders are not required to take any action.

SOURCE First National Mortgage Investment Fund

Aging Boomers Breaking the Bank – Later Retirement Part of Solution

Canada’s greying workforce will spell big fiscal trouble for future taxpayers, according to a new C.D. Howe Institute report. In “The Fiscal Implications of Canadians’ Working Longer,” authors William RobsonColin Busby, and Aaron Jacobs find that demographic change is squeezing the budgets of Canadian governments—increasing the costs of public programs and eroding the tax base as the growth in traditional working-age people flatlines.

“In the next few decades, Canadian governments will face a fiscal squeeze: rising demand for public services on one side and slower growth of government revenues on the other—and the provinces get squeezed hardest,” says Robson.

Demographics are an important driver. Age-sensitive programs, primarily publicly funded healthcare for an aging population, are pushing up spending while the working-age population is declining and shrinking the tax base.

In the report, the authors estimate the future costs of demographically sensitive programs — including healthcare, seniors benefits, education, and child benefits — as well as the future growth of the tax base. With slow workforce growth holding the economy back, the total tab for these programs will rise from 15.5 percent of GDP today to 24.2 percent by 2066. In dollar terms, the present value of the unfunded liability for age-related social spending—amounts to $4.5 trillion.

If Canadians stayed in the workforce longer – and improvements in health and longevity suggest many will be willing and able to do so – their contributions to output and taxes would mitigate the fiscal squeeze, say the authors. How might policy changes encourage longer working life?

  • First, the federal government should restore the previously scheduled increase in the normal age of OAS eligibility to age 67 – as advised by the government’s own Advisory Council on Economic Growth. Earlier receipt of a reduced amount should be an option, as with the Canada Pension Plan.
  • Second, actuarial adjustments to benefits payable under OAS and the Canada Pension Plan need to stay up to date, to ensure that people are appropriately rewarded for continuing to work after the age when they could first commence receipt.
  • Third, and more generally, other age-related rules also need updating. For example, restrictions on retirement saving after a given age and requirements to start drawing retirement income can affect decisions about when to retire. A key example is the requirement for RRSP savers to start drawing down their savings, now taxable at 71. Failing that, the trigger age should rise immediately and continue to rise with longevity.

The effect of longer work-life on the tax base will not eliminate the fiscal pressures demographic change will create for Canadian governments, note the authors. But those pressures are so large that policymakers should pursue a variety of avenues to mitigate them. “Policy changes to enable later retirement would reduce the unfunded liabilities future finance ministers will otherwise need to confront, and brighten the fiscal futures of Canadians,” says Busby.

Click here for full report:

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada’s most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.

SOURCE C.D. Howe Institute

Canada’s Real Estate Sector Remains Resilient

The Canadian real estate industry is still performing well, according to the 2018 Emerging Trends in Real Estate report published today by PwC Canada and the Urban Land Institute (ULI). Despite the industry’s steady performance, interviewees shared a concern of potential headwinds resulting in some real estate investors rebalancing their portfolios, and others taking a more defensive posture. Affordability concerns remain a dominant theme for residential real estate in Toronto and Vancouverand the report discusses rapid development outside urban centres across the country. The report also finds that investors, developers and occupiers  are rethinking how they approach their real estate investments, from ambitious intensification plans, to building communities, to investments outside major urban centres due to increased focus on new transit-centric hubs.

Commercial Real Estate
According to the report, major pension funds, large institutional investors (including REITs), which already own the majority of Class A properties, given current pricing, are continuing to focus on developing new Class A properties. These new properties could fuse commercial, retail and service properties alongside residential developments building new urban communities.

E-commerce is forecast to grow to 8% in 2018 from 4.5% in 2013.  This growth in e-commerce is having a profound effect on the retail sector and many interviewees believe retail investors need to rethink their overall retail strategy, through enhanced technology application and data analytics, as well as reinventing the retail experience. The growing penetration of e-commerce continues to push fulfillment and warehouses to the top of the list of investment and development prospects in 2018.

“Our national and local economies are greatly impacted by the real estate sector and therefore a healthy industry is good for Canada. Affordability concerns continue to be the major theme we are hearing in the residential markets in cities like Vancouver and the GTA, but there are no really good answers to this issue on the horizon” says Frank Magliocco, National Real Estate Leader, PwC Canada. “Rebalancing, rethinking, and reinventing real estate in an increasingly challenging environment is critical to be successful today, and those that are able to move quickly and leverage strategic partners will be the real winners.”

“Those who can find solutions where others see obstacles are redefining development and creating some new, yet authentically local spaces,” says Richard Joy, Executive Director, ULI Toronto.

Housing affordability continues to be an issue and concern for some parts of the country. Higher prices (rental and ownership) are driving people to smaller cities in search of less costly housing options. These new communities are developing as governments are increasing their investments in transit hubs connecting smaller cities and suburbs to urban centres. Some of the major Canadian transit investments currently underway include: the Eglinton Crosstown (Toronto), the Valley Line LRT (Edmonton) and the REM in Montreal.

The report also finds that more than one in three young adult Canadians, aged between 20–34, are living with at least one parent. Higher prices are spurring growth in multigenerational households in markets like Toronto and Vancouver. As a result, developers are now focusing on building larger condos, and adapting homes that can accommodate the various needs of this type of consumer.

The introduction of a foreign buyers’ tax to curtail foreign investment in British Columbia (August 2016) has had little impact on the market, as prices have rebounded to pre-tax levels. Respondents to the survey feel the same about Ontario’s strategy. In addition, there continues to be significant concern about the impact of expanded rent control legislation to the supply of rental apartments in Ontario.

Data Analytics and Technology
Data and technology are significantly impacting the real estate industry for all stakeholders – consumers, investors and developers. According to the report, more than US$2.9B is projected to be invested in real estate technology globally. Some notable advances include consumers viewing properties using 3-D virtual tours, investors using data analytics to find better deals, and developers conceiving entire communities and parks based on new digital design technology.

“With such rapid advancements in new technologies and a competitive landscape, real estate industry players need to have a forward-thinking and comprehensive strategy for assessing and analyzing new solutions, as well as implementing changes – to help drive innovation in this sector. Those who don’t will be left behind,” adds Miriam Gurza, Managing Director, National Real Estate Consulting Leader.

Top Five Canadian Markets to Watch in 2018
VancouverThis market has the highest investor demand and redevelopment opportunities in Canada. However, regional developers and investors anticipate those opportunities will be more conservative in 2018 due to the impact of policy changes and interest rate hikes.

Toronto: Demand will remain high for the best assets, as institutional capital and other investors continue to seek stable long-term opportunities. But these same investors will be careful about their decisions as they seek yield either in development or elsewhere in the world.

MontrealMany institutional players have begun divesting older stock properties to focus on new developments aimed at attracting millennial and seniors’ markets. This is placing some pressure on owners of older buildings to compete and contributing to a growing divergence between new and old.

OttawaThe relative affordability of this market is luring people to the city from other geographic areas, particularly high-priced Toronto, as millennials and young families search for a better, less expensive lifestyle. Technology companies are expanding or moving into this market as well, eager to capitalize on the influx of talent—and doing their best to attract more talent to the city.

WinnipegThough there’s still weakness in the residential sector, it’s offset by an abundance of non-residential activity. The $467-million Southwest Transitway, which will link the University of Manitoba to the downtown, as well as the $400-million True North Square, a four-tower mixed-use project in the downtown core, are just some of the real estate activities pushing Winnipeg into the top five.

Additional quotes from ULI:

“From coast to coast we are seeing continued robust demand to invest in prime real estate in our cities, whether office buildings, industrial facilities, rental apartments and even retail,” says Wendy Waters of ULI British Columbia.

“Even in Alberta where there have been economic struggles, there has been continued investor interest in retail and multi-residential properties,” says Amy Vandervelde, Chair of ULI ALberta

To access the full report, please click here.

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About the Urban Land Institute (ULI) and ULI Toronto
The Urban Land Institute ( is a non-profit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in sustaining and creating thriving communities worldwide. Established in 1936, the Institute has more than 40,000 members representing all aspects of land use and development disciplines. The Urban Land Institute is an active and growing organization in Canada. With over 2000 members across the country, Canada’s first ULI District Council ULI Toronto ( was established in 2005, with a second District Council in British Columbia and another one being created in Calgary. ULI Toronto has over 1500 members.

SOURCE PwC (PricewaterhouseCoopers)


Canada’s housing market remains at a high degree of vulnerability and housing starts set to level off

Canada’s housing markets remain highly vulnerable with evidence of moderate overvaluation and price acceleration, according to  Canada Mortgage and Housing Corporation (CMHC). After a boost in residential construction in 2017, housing starts are projected to decline by 2019, but to remain close to the average level from the last 5 years.

This analysis is from two key CMHC reports released today: the Housing Market Assessment (HMA) and Housing Market Outlook (HMO).

CMHC’s HMA continues to find housing markets in Toronto, Hamilton, Vancouver, Victoria and Saskatoon highly vulnerable. There is low evidence of overbuilding overall at the national level but there are growing concerns surrounding overbuilding in Calgary, Edmonton and St. John’s. In these markets, the supply of new and unsold homes outweighs the demand for housing.

Housing Market Assessment (HMA) highlights

  • Despite the recent easing in Toronto’s resale market, we continued to detect moderate evidence of price acceleration with strong growth in home prices among all housing types. High house prices could not be explained by fundamental economic drivers such as income and population growth.
  • Hamilton’s housing market remained highly vulnerable for the fifth consecutive quarter. House prices continued to grow more quickly than levels supported by economic and demographic fundamentals.
  • Vancouver’s housing market remained highly vulnerable, with evidence of moderate overheating and price acceleration, and strong overvaluation. Imbalances remained between demand and supply in the resale home market, especially for multi-family units.
  • Victoria’s overheating persisted due to continued elevated sales for apartments and townhomes in the resale market, but very low inventories in the new home market of unsold homes to support the strong demand.
  • The Quebec CMA market is now reported to have low levels of vulnerability. However, overbuilding remains an area of concern as we continue to see vacancy rates increasing for conventional rental housing.

CMHC’s HMO provides a forward-looking analysis anticipating emerging trends in Canada’s new home, resale and rental housing markets. Variables covered include housing starts, MLS® sales, and vacancy rates. Other economic factors considered in our analysis include economic and employment growth, migration, population and mortgage rates.

After the expected boost in residential construction for 2017, housing starts are projected to decline by 2019. Sales in the existing-homes market are expected to decline relative to the record level of more than 535,000 MLS® sales registered in 2016.

The average MLS® price should increase over the forecast horizon, but at a slower rate than in the past four years. The average should lie between $493,900 and $511,300 in 2017 and between $499,400 and $524, 500 by 2019.

Housing Market Outlook (HMO) regional highlights

British Columbia

Housing starts and MLS® sales in B.C. are expected to decrease in 2018 and 2019, but will remain above historical levels, while MLS® prices will continue to grow at a slower pace as the housing market moves towards more balanced conditions. Rental demand will continue to be strong through the forecast period, with vacancy rates remaining tight and average rents rising.


Alberta and Saskatchewan’s gradual recovery from the oil-price shock that started in 2014 will likely contribute to positive net interprovincial migration flows, supporting housing markets. Housing market conditions are expected to continue to slowly transition from a buyer’s market to a more balanced one in 2018 and 2019. However, the overbuilding in many CMAs is expected to put downward pressure on new housing construction. Manitoba has a more diversified economy compared to the other two provinces, which has allowed it to mitigate the risk of large economic swings that the oil-producing provinces experience when oil prices move significantly.


Ontario MLS® sales and starts will trend lower over the forecast horizon, with modest growth in home prices expected relative to the recent past. Rising mortgage carrying costs will exert downward pressure on housing demand and shift demand to multi-unit homes which includes condominium and rental units. Housing demand will hold up better in eastern and southwestern Ontario centres given higher affordability levels, fewer market imbalances and generally better economic conditions.


Stronger employment growth will stimulate housing demand in 2018 and 2019. As a result, the province’s resale markets will continue to tighten and prices are projected to rise. Meanwhile, population aging will continue to provide support to residential construction in the apartment segment.

Atlantic Canada

Housing starts, MLS® sales and prices are expected to rise gradually over the forecast period, but continued economic growth will rely heavily on boosting exports.

As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.

“We continue to see a high degree of vulnerability in Canada’s housing market, fuelled by moderate overvaluation and price acceleration. House price growth continues to outpace economic fundamentals like household income and population growth. In 2018 and into 2019, housing starts are projected to decline while house prices should increase over the forecast horizon, but at a slower rate than in the past four years.”

Bob Dugan, Chief Economist, Canada Mortgage and Housing Corporation

Source CMHC



Residential Mortgage Underwriting Practices and Procedures – effective January 1, 2018 B-20

I. Purpose and Scope of the Guideline

This Guideline sets out OSFI’s expectations for prudent residential mortgage underwriting, and is applicable to all federally-regulated financial institutionsFootnote1 (FRFIs) that are engaged in residential mortgage underwriting and/or the acquisition of residential mortgage loan assets in Canada.  It complements relevant provisions of the Bank ActTrust and Loan Companies Act, the Insurance Companies Act and the Cooperative Credit Associations Act, as well as the Government of Canada’s mortgage insurance guarantee framework, which establishes the rules for government-backed insured mortgages.Footnote2

For the purpose of this Guideline, a “residential mortgage” includes any loan to an individualFootnote3 that is secured by residential property (i.e., one to four unit dwellings).  Home equity lines of credit (HELOCs), equity loans and other such products that use residential property as security are also covered by this Guideline.

This Guideline articulates five fundamental principles for sound residential mortgage underwriting.  The first principle relates to FRFI governance and the development of overarching business objectives, strategy and oversight mechanisms in respect of residential mortgage underwriting and/or the acquisition of residential mortgage loan assets.

The next three principles focus on the residential mortgage credit decision and the underwriting process, specifically the assessment of:

  • The borrower’s identity, background and demonstrated willingness to service their debt obligations on a timely basis (Principle 2);
  • The borrower’s capacity to service their debt obligations on a timely basis (Principle 3); and,
  • The underlying property value/collateral and management process (Principle 4).

These three principles should be evaluated by lenders using a holistic, risk-based approach – unless otherwise specified in this guidance.  The borrower’s demonstrated willingness and capacity to service their debt obligations on a timely basis should be the primary basis of a lender’s credit decision.  Undue reliance on collateral can pose challenges, as the process to obtain title to the underlying property security can be difficult for the borrower and costly to the lender.

The fifth principle addresses the need for mortgage underwriting and purchasing to be supported by effective credit and counterparty risk management, including, where appropriate, mortgage insurance.  The final section of the Guideline summarizes disclosure and supervisory requirements.

OSFI expects FRFIs to verify that their residential mortgage operations are well supported by prudent underwriting practices, and have sound risk management and internal controls that are commensurate with these operations.

II. Principles


Principle 1: FRFIs that are engaged in residential mortgage underwriting and/or the acquisition of residential mortgage loan assets should have a comprehensive Residential Mortgage Underwriting Policy (RMUP). Footnote4  Residential mortgage practices and procedures of FRFIs should comply with their established RMUP.

Residential Mortgage Underwriting Policy (RMUP)

The Board-approved Risk Appetite FrameworkFootnote5 should establish limits regarding the level of risk that the FRFI is willing to accept with respect to residential mortgages, and this should form the basis for the RMUP.  The RMUP should further align with the FRFI’s enterprise-wide strategy and, in turn, be linked to the enterprise risk management framework.

The RMUP should reflect the size, nature and complexity of a FRFI’s residential mortgage business and should give consideration to factors and metrics such as:

  • Significant elements of the FRFI’s business strategy and approach to residential mortgage underwriting and the acquisition of residential mortgage loan assets (e.g., products, markets) – in Canada and internationally;
  • At the portfolio level, risk management practices and processes with respect to residential mortgage loans and loan assets, including limits on relevant segments or parameters (e.g., lending, acquisition, product, borrower/property characteristics, and geographic concentration);
  • At the individual residential mortgage loan level, acceptable underwriting and acquisition standards, criteria and limits (e.g., credit scores, loan-to-value ratios, debt service coverage, amortization periods) for all residential mortgage products and loan types (e.g., conforming and non-conforming);
  • Identification and escalation processes for residential mortgage underwriting and/or acquisition exceptions, if any, including a process for approval and exception reporting;
  • Limits on any exceptions to residential mortgages underwritten and/or acquired; and
  • The roles and responsibilities for those positions charged with overseeing and implementing the RMUP.

FRFIs should revisit their RMUP on a regular basis to ensure that there is strong alignment between their risk appetite statement and their actual mortgage underwriting, acquisition, and risk management policies and practices.

Board and Senior Management Roles

Senior Management is responsible for the development and implementation of the RMUP and related controls. However, the Board of Directors (Board) of the FRFI has a critical role in providing high-level guidance to, and oversight of, Senior Management with respect to matters relating to mortgage underwriting and portfolio management.

The Board of the FRFI should review and discuss the RMUP or any changes to the RMUP.  The Board should understand the decisions, plans and policies being undertaken by Senior Management with respect to residential mortgage underwriting and/or the acquisition of residential mortgage loan assets, and their potential impact on the FRFI.  It should probe, question and seek assurances from Senior Management that these are consistent with the Board’s own decisions and Board-approved business and risk strategy for the FRFI, and that the corresponding internal controls are sound and being implemented in an effective manner.

The Board should receive timely, accurate, independent and objective reporting on the related risks of the residential mortgage business, including the procedures and controls in place to manage the risks, and the overall effectiveness of risk management processes.

The Board should be aware of, and be satisfied with, the manner in which material exceptions to policies and controls related to residential mortgages are identified, approved and monitored.

Internal Controls, Monitoring and Reporting

Effective control, monitoring and reporting systems and procedures should be developed and maintained by FRFIs to ensure on-going operational compliance with the RMUP.  FRFIs should identify, measure, monitor and report the risks in all residential mortgage lending and acquisition operations on an on-going basis, and across all jurisdictions.  The FRFI’s residential mortgage risk appetite should be understood at all relevant levels of the organization.

FRFIs should have adequate processesFootnote6 in place with respect to residential mortgages to independently and objectively:

  • Identify, assess and analyze the key risks;
  • Monitor risk exposures against the Board-approved risk appetite of the FRFI;
  • Ensure that risks are appropriately controlled and mitigated;
  • Ensure that risk management policies, processes and limits are being adhered to;
  • Provide exception reporting, including the identification of patterns, trends or systemic issues within the residential mortgage portfolio that may impair loan quality or risk mitigation factors; and
  • Report on the effectiveness of models.

Mortgage Underwriting Declaration

A senior officer of a FRFI should make an annual declaration to the Board confirming that the FRFI’s residential mortgage underwriting and acquisition practices and associated risk management practices and procedures meet, except as otherwise disclosed in the declaration, the standards set out in this Guideline.

When a deviation from this Guideline has taken place, the nature and extent of the deviation, and the measures taken or proposed to correct (and mitigate the risk associated with) the deviation, should be documented and disclosed to the Board and to OSFI in full.


Principle 2: FRFIs should perform reasonable due diligence to record and assess the borrower’s identity, background and demonstrated willingness to service his/her debt obligations on a timely basis.

Background and Credit History of Borrower

FRFIs should ensure that they make a reasonable enquiry into the background, credit history, and borrowing behaviour of a prospective residential mortgage loan borrower as a means to establish an assessment of the borrower’s reliability to repay a mortgage loan.

For example, a credit bureau score, offered by the major credit bureaus, is an indicator often used to support credit granting. However, a credit score should not be solely relied upon to assess borrower qualification, as such an indicator measures past behaviour and does not immediately incorporate changes in a borrower’s financial condition or demonstrated willingness to service their debt obligations in a timely manner.

FRFIs should also ensure that they obtain appropriate borrower consent for this assessment and comply with relevant provincial and federal legislation governing the use and privacy of personal information (e.g., Personal Information Protection and Electronic Documents Act).

Loan Documentation

Maintaining sound loan documentation is an important administrative function for lenders.  It provides a clear record of the factors behind the credit granting decision, supports lenders’ risk management functions, and permits independent audit/review by FRFIs and by OSFI.  As well, maintaining sound documentation is necessary for lenders to demonstrate compliance with mortgage insurance requirements and ensure insurance coverage remains intact.

Consequently, FRFIs should maintain complete documentation of the information that led to a mortgage approval.  This should generally include:

  • A description of the purpose of the loan;
  • Employment status and verification of income (see Principle 3);
  • Debt service ratio calculations, including verification documentation for key inputs (e.g., heating, taxes, and other debt obligations);
  • LTV ratio, property valuation and appraisal documentation (see Principle 4);
  • Credit bureau reports and any other credit enquiries;
  • Documentation verifying the source of the down payment;
  • Purchase and sale agreements and other collateral supporting documents;
  • An explanation of any mitigating criteria or other elements (e.g., “soft” information) for higher credit risk factors;
  • Property insurance agreementsFootnote7;
  • A clearly stated rationale for the decision (including exceptions); and
  • A record from the mortgage insurer validating commitment to insure the mortgage, where applicable.

The above documentation should be obtained at the origination of the mortgage and for any subsequent refinancing of the mortgage.  FRFIs should update the borrower and property analysis periodically (not necessarily at renewal) in order to effectively evaluate credit risk.  In particular, FRFIs should review some of the aforementioned factors if the borrower’s condition or property risk changes materially.

As a general principle, an independent third-party conducting a credit assessment of a FRFI’s mortgage loan should be in a position to replicate all aspects of the underwriting criteria, based on the FRFI’s sound documentation, to arrive at the derived credit decision.

Purpose of Mortgage Loan

FRFIs should ascertain and document the purpose of a prospective loan, as it is a key consideration in assessing credit risk.  This includes ascertaining the:

  • Intended use of the loan (e.g., purchase, refinancing), and
  • Type of purchase (e.g., owner-occupied primary residence, recreational or other secondary property, investment property, property that relies on rental income to service the loan); or
  • Type of refinancing (e.g., debt consolidation, changes to existing loan characteristics, access to home equity, renovation, etc.)

Anti-Money Laundering/Anti-Terrorist Financing

As part of a FRFI’s assessment of the borrower, if the FRFI is aware, or there are reasonable grounds to suspect, that the residential mortgage loan transaction is being used for illicit purposes, then the FRFI should decline to make the loan and consider filing a suspicious transaction report to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) with respect to the attempted transaction.

FRFIs should ensure that residential mortgage loans are subject to the requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR), as well as OSFI’s Guideline B-8 Deterring and Detecting Money Laundering and Terrorist Financing with respect to detecting and deterring the possible use of a property purchase or mortgage to launder the proceeds of crime or assist in terrorist financing.Footnote8

In particular, FRFIs should ensure that they comply with the customer identification and record keeping requirements of the PCMLTFR, and also ensure that they obtain sufficient information about the borrower to determine whether the customer is a higher risk customer, as defined under the PCMLTFA and PCMLTFR.


FRFIs should maintain adequate mechanisms for the detection, prevention and reporting of all forms of fraud or misrepresentation (e.g., falsified income documents) in the mortgage underwriting process.  For insured mortgage loan applications, FRFIs are expected to report suspected or confirmed fraud or misrepresentation to the relevant mortgage insurer.


Principle 3: FRFIs should adequately assess the borrower’s capacity to service his/her debt obligations on a timely basis. 

Income Verification

FRFIs should demonstrate rigour in the verification of a borrower’s income, as income is a key factor in the assessment of the capacity to repay a mortgage loan, and verification of income helps detect and deter fraud or misrepresentation.  This includes substantiation of a borrower’s:

  • Employment status; and
  • Income history.

In regard to loan documentation that supports income verification, FRFIs should undertake rigorous efforts to confirm that:

  • The income amount is verified by an independent source;
  • The verification source is difficult to falsify;
  • The verification source directly addresses the amount of the declared income; and
  • The income verification information/documentation does not contradict other information provided by the borrower in the underwriting process.

To the extent possible, income assessments should also reflect the stability of the borrower’s income, including possible negative outcomes (e.g., variability in the salary/wages of the borrower).  Conversely, temporarily high incomes (e.g., overtime wages, irregular commissions and bonuses) should be suitably normalized or discounted.

For borrowers who are self-employed, FRFIs should also be guided by the sound principles listed above.  In particular, FRFIs should obtain proof of income (e.g., Notice of Assessment and T1 General) and relevant business documentation.

Lenders should also exercise rigorous due diligence in underwriting loans that are materially dependent on income derived from the property to repay the loan (e.g., rental income derived from an investment property).

Borrowers relying on income from sources outside of Canada pose a particular challenge for income verification, and lenders should conduct thorough due diligence in this regard.  Income that cannot be verified by reliable, well-documented sources should be treated cautiously when assessing the ability of a borrower to service debt obligations.

Guarantors and Co-Signors of Mortgages

Where a FRFI obtains a guarantee or co-signor supporting the mortgage, it should also undertake a sufficiently rigorous credit assessment of the guarantor/co-signor.  This assessment should be commensurate with the degree to which the guarantor/co-signor’s support is relied upon.  The guarantor/co-signor should fully understand his/her legal obligations.

Debt Service Coverage

A fundamental component of prudent underwriting is an accurate assessment of the adequacy of a borrower’s income, taking into account the relevant mortgage payments and all debt commitments.  As part of this assessment, FRFIs should establish debt serviceability metrics (including the method to calculate these metrics), set prudent measures for debt serviceability (articulated in the RMUP) and calculate each borrower’s debt serviceability ratios for the purposes of assessing affordability.

Two ratios that are commonly used are the Gross Debt Service (GDS) ratio and the Total Debt Service (TDS) ratio.  For example, for insured mortgages, the Canada Mortgage Housing Corporation (CMHC) defines GDS and TDS ratios and sets maximum GDS and TDS limits.  Private mortgage insurers also define similar debt serviceability metrics and limits for mortgage insurance products.  OSFI expects the average GDS and TDS scores for all mortgages underwritten and/or acquired to be less than the FRFI’s stated maximums, as articulated in its RMUP, and reflect a reasonable distribution across the portfolio.

FRFIs should have clear policies with respect to the contributing factors for the calculation of GDS and TDS ratios, including, but not limited to:

  • Principal and interest payments on the mortgage loan;
  • Primary and other sources of income;
  • Heating costs;
  • Property taxes;
  • Condominium or strata fees; and
  • Payments for all other credit facilities (e.g., unsecured personal loan, second mortgage loan, credit card).

GDS and TDS ratios should be calculated conservatively (i.e., appropriately stressed for varied financial and economic conditions and/or higher interest rates).

For insured residential mortgages, OSFI expects FRFIs to meet mortgage insurers’ requirements in regard to debt serviceability.  For uninsured residential mortgages, FRFIs should contemplate current and future conditions as they consider qualifying rates and make appropriate judgments.  At a minimum, the qualifying rate for all uninsured mortgages should be the greater of the contractual mortgage rate plus 2% or the five-year benchmark rate published by the Bank of Canada.Footnote9


The mortgage amortization period for the loan is an important factor in the lending decision, as it affects the required debt service for the borrower and the growth of borrower equity in the underlying property.  FRFIs should have a stated maximum amortization period for all residential mortgages that are underwritten.  OSFI expects the average amortization period for mortgages underwritten to be less than the FRFI’s stated maximum, as articulated in its RMUP.

Additional Assessment Criteria

In addition to income and debt service coverage, FRFIs should take into consideration, as appropriate, other factors that are relevant for assessing credit risk, such as the borrower’s assetsFootnote10 and liabilities (net worth), other living expenses, recurring payment obligations, and alternate sources for loan repayment.


Principle 4: FRFIs should have sound collateral management and appraisal processes for the underlying mortgage properties.


Mortgage loans are granted primarily on the basis of the borrower’s demonstrated willingness and capacity to service his/her debt obligations.  However, to the extent that the lender would ever need to realize on the underlying property serving as security, it is important to have sound collateral practices and procedures.

Property Appraisals

A significant amount of leverage is often involved in residential mortgage lending and there is general reliance on collateral to provide adequate recourse for repayment of the debt if the borrower defaults.  As such, a proper and thorough assessment of the underlying property is essential to the residential mortgage business and key to adequately mitigating risks.  FRFIs should have clear and transparent valuation policies and procedures in this regard.

In assessing the value of a property, FRFIs should take a risk-based approach, and consider a combination of valuation tools and appraisal processes appropriate to the risk being undertaken.  The valuation process can include various methods such as on-site inspections, third-party appraisals and/or automated valuation tools.

On-site inspection
In general, FRFIs should conduct an on-site inspection on the underlying property, to be performed by either a qualified employee or an appraiser, depending on the nature of the property or transaction.  Beyond the valuation of the property, an on-site property inspection is beneficial in the process of validating the occupancy, condition and, ultimately, the existence of the property.
Third-party appraisal
FRFIs that use third-party appraisers should ensure that appraisals are prepared with the appropriate professional appraisal skill and diligence, and that appraisers are designated, licensed or certified, and meet qualification standards.  As well, these appraisers should be independent from the mortgage acquisition, loan processing and loan decision process.
Automated valuation tools
Where FRFIs use automated valuation tools, processes should be established to monitor their on-going effectiveness in representing the market value of the property.  Controls should also be in place to ensure that the tools are being used appropriately by lending officers.

In general, FRFIs should not rely on any single method for property valuation.  FRFIs should maintain and implement a framework for critically reviewing and, where appropriate, effectively challenging the assumptions and methodologies underlying valuations and property appraisals.  FRFIs should undertake a more comprehensive and prudent approach to collateral valuation for higher-risk transactions.  Such transactions include, for example, residential mortgage loans with a relatively high LTV ratio, loans for illiquid properties, and loans in markets that have experienced rapid property price increases, which generate more uncertainty about the accuracy and stability of property valuations.

Realistic, substantiated and supportable valuations should be conducted to reflect the current price level and the property’s function as collateral over the term of the mortgage.  Consistent with Principle 2 above, comprehensive documentation in this regard should be maintained.

FRFIs should ensure that the claim on collateral is legally enforceable and can be realized in a reasonable period of time or, absent that verification, ensure that title insurance from a third party is in place.

When extending loans to borrowers, FRFIs should impose contractual terms and conditions that secure their full protection under the laws applicable in the relevant jurisdiction, and seek to preserve an appropriate variety of recourses (including, where applicable, actions on personal covenant) should the borrower default.  In addition, FRFIs should have the necessary action plans in place to determine the best course of action upon borrower default.  Such action plans should cover:

  • The likely recourses/options available to the FRFI upon default in all relevant jurisdictions;
  • The identification of the parties against whom these recourses may be exercised; and
  • A strategy for exercising these options in a manner that is prudentially sound.

Loan-to-Value (LTV) Ratio


The commonly-used LTV ratio is an evaluation of the amount of collateral value that can be used to support the loan.  Past experience suggests it is highly correlated with credit risk.  Residential mortgage loans with higher LTV ratios generally perform worse than those with a lower LTV ratio (i.e., higher proportion of equity).

LTV Ratio Frameworks

Robust LTV ratio frameworks can serve to mitigate the risk of various mortgage loans (e.g. lower LTV ratio limits can help to mitigate risk by limiting loan exposure).  FRFIs should establish and adhere to appropriate maximum LTV ratio limits for various types of mortgage transactions (e.g., insured loans, conventional mortgage loans, non-conforming mortgage loans, and HELOCs).  The maximum LTV ratio limits may be determined by law or may be established by a FRFI based on risk and other considerations, including the current and expected market conditions, the type of loan, as well as other risk factors that may impact borrowers’ ability to service their debt and/or lenders’ ability and cost to realize on their security. OSFI expects FRFIs’ LTV ratio frameworks to be dynamic. To this end, FRFIs should have in place a robust process for regularly monitoring, reviewing and updating their LTV ratio frameworks.

The LTV ratio should be re-calculated upon any refinancing, and whenever deemed prudent, given changes to a borrower’s risk profile or delinquency status, using an appropriate valuation/appraisal methodology.

A FRFI should not arrange (or appear to arrange) with another lender, a mortgage or combination of a mortgage and other lending products (secured by the same property), in any form that circumvents the FRFI’s maximum LTV ratio or other limits in its RMUP, or any requirements established by law. For greater clarity, a FRFI should not engage in any transactions (e.g., co-lending, bundling a mortgage loan with various priority interests, or any funding structure involving other secured loans) with other lenders, where the combined LTV of the loan(s) secured against the property exceeds the FRFI’s specific LTV limits established within its LTV ratio framework. Footnote11

Down Payment

With respect to the borrower’s down payment for both insured and uninsured mortgages, FRFIs should make rigorous efforts to determine if it is sourced from the borrower’s own resources or savings.  Where part or all of the down payment is gifted to a borrower, it should be accompanied by a letter from those providing the gift confirming no recourse.  Where non-traditional sources of down payment (e.g., borrowed funds) are being used, further consideration should be given to establishing greater risk mitigation.  Incentive and rebate payments (i.e., “cash back”) should not be considered part of the down payment. Footnote12

Property Value used for the LTV Ratio

FRFIs should assess and adjust, as appropriate, the value of the property for the purposes of calculating the LTV and determining lending thresholds within LTV limits, including limits for conventional mortgage loans, non-conforming mortgage loans and HELOCs (see sub-sections below), by considering relevant risk factors that make the underlying property more vulnerable to a significant house price correction or that may significantly affect the marketability of the property.  These factors include, but are not limited to:

  • The location, type, and expected use of the property for which the loan is granted;
  • The property’s current market price, recent price trends and housing market conditions; and
  • Any other relevant risk that may affect the sustainability of the value of the underlying property.

In markets that have experienced rapid house price increases, FRFIs should use more conservative approaches to estimating the property value for LTV calculations and not assume that prices will remain stable or continue to rise.

For the purposes of incorporating property value risk and determining appropriate lending thresholds for mortgage loans, FRFIs have flexibility to apply valuation adjustments to specific properties when calculating LTV and/or by setting LTV ratio framework limits that consider and incorporate the property valuation risk factors described in this sub-section.

LTV Ratio and Loan Type

Residential mortgage loans are often defined with reference to their LTV ratio.  A FRFI’s LTV limit structure for underwriting loans should reflect the risk attributes of different types of mortgage loans and be consistent with its RMUP.  OSFI expects the average LTV ratios for all conforming and non-conforming residential mortgages to be less than the FRFI’s stated maximums, as articulated in its RMUP, and reflect a reasonable distribution across the portfolio.

(i) Non-Conventional (“High Ratio”) Mortgage Loans

Non-conventional, or “high ratio”, loans have higher LTV ratios (less equity) at origination and generally require mortgage insurance to mitigate risk (see Principle 5).  By law, residential mortgages underwritten for the purpose of purchasing, renovating or improving a property must be insured if their LTV ratios are greater than 80 percent. Footnote13

(ii) Conventional (“Low Ratio”) Mortgage Loans

Conventional, or “low ratio”, mortgage loans have lower LTV ratios (more equity) at origination and do not require mortgage insurance by law since their LTV ratios are equal to or less than 80 percent.

(iii) Non-Conforming Mortgage Loans

Non-conforming mortgage loans are a subset of conventional mortgage loans and are broadly defined as having higher-risk attributes or deficiencies, relative to other conventional mortgages.  OSFI expects FRFIs to develop and maintain a comprehensive and risk-based definition for non-conforming loans in their RMUPs.  In general, a FRFI’s definition should include any of the following:

  • Loans with insufficient income verification (i.e., do not meet principle 3);
  • Loans to borrowers with low credit scores;
  • Loans to borrowers with high debt serviceability ratios;
  • Loans with underlying property attributes that result in elevated credit risk (e.g., illiquid properties); or
  • Loans that otherwise have clear deficiencies relative to other conforming mortgages.

OSFI expects FRFIs to impose a maximum LTV ratio less than or equal to 65 percent for non-conforming residential mortgages.  This threshold should not be used as a demarcation point below which sound underwriting practices and borrower due diligence do not apply.

In general, the maximum lending threshold for a non-conforming loan should decrease as the risk of the transaction increases (e.g., due to presence of multiple higher-risk attributes or deficiencies in a loan application, the presence of higher risk factors around property valuation, etc.)

(iv) Home Equity Lines of Credit (HELOCs)

A HELOCFootnote14 is a form of non-amortizing (revolving) credit that is secured by a residential property.  Unlike a traditional residential mortgage, most HELOCs are not constructed to fit a pre-determined amortization, although regular, minimum periodic payments are generally required by most lenders.

HELOC products provide an alternative source of funds for consumers.  However, FRFIs should recognize that, over time, these products can also significantly add to a consumer’s outstanding debt. While some borrowers may elect to repay their outstanding HELOC balances over a shorter period of time relative to the average amortization of a typical traditional mortgage, the revolving nature of HELOCs can also lead to greater persistence of outstanding balances, and greater risk of loss to lenders.  As well, it can be easier for borrowers to conceal potential financial distress by drawing on their lines of credit to make mortgage payments and, consequently, present a challenge for lenders to adequately assess changing credit risk exposures in a timely fashion.

Given the unique features of HELOCS relative to traditional residential mortgages, FRFIs should ensure appropriate mitigation of the associated risks of HELOCs, including the ability to expect full repayment over time, and the need for increased monitoring of a borrower’s credit quality.  In addition, FRFIs should review the authorized amount of a HELOC where any material decline in the value of the underlying property has occurred and/or the borrower’s financial condition has changed materially.  This expectation also applies where a HELOC is structured as part of a consolidated or linked mortgage loan product.

OSFI expects FRFIs to limit the non-amortizing HELOC component of a residential mortgage to a maximum authorized LTV ratio of less than or equal to 65 percent.Footnote15  OSFI expects the average LTV ratio for all HELOCs to be less than the FRFI’s stated maximums, as articulated in its RMUP, and reflect a reasonable distribution across the portfolio.

For greater clarity, in determining lending thresholds for HELOCs, OSFI expects FRFIs to apply the principles set out in the sub-sections “LTV Ratio Frameworks” and “Property Value used for the LTV Ratio”. In general, the maximum lending threshold for a HELOC should decrease as the risk of the transaction increases (e.g., due to presence of higher-risk borrower factors, the presence of higher risk factors around property valuation, etc.)


Principle 5: FRFIs should have effective credit and counterparty risk management practices and procedures that support residential mortgage underwriting and loan asset portfolio management, including, as appropriate, mortgage insurance.

Mortgage Insurance

Mortgage default insurance (mortgage insurance) is often used as a risk mitigation strategy.  However, mortgage insurance should not be a substitute for sound underwriting practices by FRFIs, as outlined in this Guideline.  It should not be considered a substitute for conducting adequate due diligence on the borrower, or for using other risk mitigants.

FRFIs may obtain mortgage insurance from CMHC and private mortgage insurance providers.  OSFI agrees that the use of either is appropriate, provided that a FRFI conduct due diligence on the mortgage insurer commensurate with its level of exposure to that insurer.  When performing such an assessment, a FRFI should give consideration to, among other things, the mortgage insurer’s:

  • Claims payment record;
  • Expected future claims obligations;
  • Balance sheet strength;
  • Funding sources, including the level of and access to capital, and form, amount and sources of liquidity;
  • Management, including the quality of its governance practices and procedures; and
  • Reinsurance arrangements and the direct and indirect impact that they may have on the FRFI’s own arrangements with the insurer.

The evaluation of each FRFI’s mortgage insurance counterparty should be updated throughout the life of the insurance contract.  In cases where there may be material exposures incurred but not reported losses, FRFI management should ensure that the evaluation continues beyond the expiration date of the contract to ensure that the FRFI assesses potential insurance recoverable from expected future claims.

For insured mortgages, FRFIs should meet any underwriting, valuation, or other information requirements set out by the mortgage insurer to ensure the validity of insurance on those loans.

Purchase of Mortgage Assets Originated by a Third Party

FRFIs that acquire residential mortgage loans that have been originated by a third party should ensure that the underwriting standards of that third party – including due diligence on the borrower, debt service coverage, collateral management, LTV ratios, etc. – are consistent with the FRFI’s RMUP and compliant with this Guideline.  FRFIs should not rely solely on the attestation of the third party.  In addition to underwriting, FRFIs should also consider the risks associated with other functions that may be performed by the third party in respect of acquired loans (e.g., servicing).

Model Validation and Stress Testing

FRFIs often use models to contribute to residential mortgage underwriting and/or acquisition decisions (e.g., valuation or bankruptcy models) or to make lending decisions by way of auto-adjudication.

FRFIs are expected to have an independent validation process at both inception and on a regular basis for these models.  This would include the regular review and recalibration of risk parameters with respect to their mortgage portfolio.  The models used should reflect the nature of the portfolio and, as appropriate, be adapted if there is substantial variation of risk within the portfolio.  This could include the development of new models to capture specific risk segments.

Additionally, FRFIs should have a stress-testing regime that considers unlikely, but plausible, scenarios and their potential impact on the residential mortgage portfolio.  The results of such stress testing should be considered in the on-going validation of any models and substantially reflected in FRFIs’ Internal Capital Adequacy Assessment Process (ICAAP)Footnote16 (deposit-taking institutions) or internal target capital ratio (insurance companies).

Higher-Risk Asset Portfolios

Heightened Prudence

FRFIs have the flexibility to underwrite and/or acquire a wide range of residential mortgages with varying risk profiles.  However, for residential mortgage loan asset portfolios of FRFIs that constitute greater credit risks (e.g., non-conforming mortgages), OSFI expects FRFIs to exercise heightened prudence through:

  • Greater Board and senior management oversight of the asset portfolio;
  • Increased reporting and monitoring of the residential mortgage loan asset portfolio by management;
  • Stronger internal controls (i.e., additional substantiation of credit qualification information, enhanced credit approval processes, greater scrutiny by the risk management oversight function, etc.);
  • Stronger default management and collections capabilities; and
  • Increased capital levels backstopping the impact of portfolio risk (see next section).

FRFIs should understand their mortgage portfolio risk dynamics, and ensure they are taken into account when refining their risk appetite expectations.

Adequacy of Regulatory Capital

OSFI expects that FRFIs will maintain adequate regulatory capital levels to properly reflect the risks being undertaken through the underwriting and/or acquisition of residential mortgages.  FRFIs should reflect mortgage loan assets with inherently greater risk either in their risk-based rating systems or through risk-sensitive increases in capital identified through their ICAAP (deposit-taking institutions) or internal target capital ratio (insurance companies).

III. Guideline Administration

Disclosure Requirements

Increased disclosure leads to greater transparency, clarity and public confidence in FRFI residential mortgage underwriting practices.  As a matter of principle, FRFIs should publicly disclose sufficient information related to their residential mortgage portfolios for market participants to be able to conduct an adequate evaluation of the soundness and condition of FRFIs’ residential mortgage operations.

Public disclosures related to residential mortgages should include, but not limited to, the publishing by residential mortgage lenders and acquirers that are FRFIs, on a quarterly basis, and in a format and location that will support public availability and comprehension:

  • The amount and percentage of the total residential mortgage loans and HELOCs that are insured versus uninsured.  This should include the FRFI’s definition of “insured”.  In addition, a geographic breakdown for the amount and percentage of the total residential mortgage loans and HELOCs that are insured versus uninsured – provincially in Canada, as well as from foreign operations;
  • The percentage of residential mortgages that fall within various amortization period ranges significant for the FRFI, e.g., 20-24 years, 25-29 years, 30-34 years, 35 years and greater – in Canada, as well as from foreign operations;
  • The average LTV ratio for the newly originated and acquired uninsured residential mortgages and HELOCs at the end of each period.  In addition, a geographic breakdown for the average LTV ratio for the newly originated and acquired uninsured residential mortgage loans and HELOCs – provincially in Canada, as well as from foreign operations; and
  • A discussion on the potential impact on residential mortgage loans and HELOCs in the event of an economic downturn.

To meet the above disclosure requirements, the presentation of foreign operations can be grouped into one category, such as “other jurisdictions”.

Supervision of FRFI

Information for Supervisory Purposes

Enhanced transparency and sound documentation, will allow OSFI to better understand the FRFI’s financial position and economic impacts and risks associated with a FRFI’s residential mortgage underwriting and acquisition practices.  A FRFI is required to maintain and provide to OSFI, upon request, its RMUP and associated management reports.  A FRFI should promptly inform OSFI if it becomes aware of any mortgage underwriting issues that could materially impact its financial condition.

Non-compliance with the Guideline

OSFI supervises FRFIs in order to determine whether they are in sound financial condition and to promptly advise the FRFI Board and Senior Management in the event the institution is not in sound financial condition or is not complying with supervisory requirements. OSFI is required to take, or require the Board and/or Senior Management to take, necessary corrective measures or series of measures to deal with prudential soundness issues in an expeditious manner and to promote the adoption by management and boards of directors of financial institutions of policies and procedures designed to control and manage risk.

Where a FRFI fails to adequately account and control for the risks of underwriting or acquisition of residential mortgages, on a case-by-case basis, OSFI can take, or require the FRFI to take, corrective measures.  OSFI actions can include heightened supervisory activity and/or the discretionary authority to adjust the FRFI’s capital requirements or authorized leverage ratio, commensurate with the risks being undertaken by the FRFI.

IV. Other Guidance

This Guideline is complementary to, and should be read in conjunction with, other OSFI guidance:

  • Corporate Governance Guideline
  • Guideline B-1 (Prudent Person Approach)
  • Guideline B-2 (Large Exposure Limits)
  • Guideline B-8 (Deterring and Detecting Money Laundering and Terrorist Financing)
  • Guideline B-10 (Outsourcing of Business Activities, Functions and Processes)
  • Guideline E-21 (Operational Risk Management)
  • Capital Adequacy Requirements Guideline
  • Leverage Requirements Guideline
  • Guideline A-4 (Regulatory Capital and Internal Capital Targets)


Footnote 1
This includes financial institutions incorporated, continued or regulated under the Bank ActTrust and Loan Companies ActInsurance Companies Act and the Cooperative Credit Associations Act.

Return to footnote1referrer

Footnote 2
For the purpose of this Guideline, an “insured mortgage” refers to a mortgage loan that is insured against loss caused by default on the part of a borrower, under a loan secured by real property (i.e., one- to four-unit dwellings) or chattel, or for a property that is on-reserve.  This includes both individual transaction and portfolio insurance.  It does not include separate insurance products that often accompany mortgage loans, such as: life, disability, illness, loss of employment, title, or property valuation insurance.

Return to footnote2referrer

Footnote 3
For greater clarity, this includes an individual borrower, personal investment company, personal holding company, or personal trust. This does not include commercial loans, such as loans to entities engaged in residential real estate investments or transactions where a residential property is used in support of a commercial credit application.

Return to footnote3

Footnote 4
The RMUP can be one consolidated document or a set of mortgage policy documents.

Return to footnote4referrer

Footnote 5
The requirements for the Risk Appetite Framework are summarized in the OSFI Corporate Governance guideline.

Return to footnote5referrer

Footnote 6
Typically, these processes are carried out by the FRFI’s risk management oversight function.

Return to footnote6referrer

Footnote 7
This includes a borrower’s agreement to obtain property insurance, as a condition of mortgage approval, as well as proof of property insurance obtained by the FRFI when the mortgage funds are disbursed.

Return to footnote7

Footnote 4
The RMUP can be one consolidated document or a set of mortgage policy documents.

Return to footnote4referrer

Footnote 5
The requirements for the Risk Appetite Framework are summarized in the OSFI Corporate Governance Guideline.

Return to footnote5referrer

Footnote 6
Typically, these processes are carried out by the FRFI’s risk management oversight function.

Return to footnote6referrer

Footnote 7
This includes a borrower’s agreement to obtain property insurance, as a condition of mortgage approval, as well as proof of property insurance obtained by the FRFI when the mortgage funds are disbursed.

Return to footnote7

Footnote 8
The PCMLTFA and the PCMLTFR do not apply to property and casualty insurance companies.

Return to footnote8referrer

Footnote 9
The benchmark rate (5-yr conventional mortgage rate) is published weekly by the Bank of Canada in Series V80691335.

Return to footnote9

Footnote 10
From an operational risk perspective, obtaining recourse to a borrower’s foreign assets, in the event of default, may be more challenging for FRFIs.

Return to footnote10referrer

Footnote 11
This restriction does not apply in cases where the additional secured funding is provided by a municipal, territorial, provincial or the federal government.

Return to footnote11

Footnote 12
Incentive and rebate payments (i.e., “cash back”) may be considered as part of the down payment in cases related to Affordable Housing Programs that are funded by a municipal, territorial, provincial or the federal government. OSFI expects a FRFI to exercise increased oversight, control, and reporting in respect of such transactions.

Return to footnote12referrer

Footnote 13
See the Bank Act, subsection 418(1); Trust and Loan Companies Act, subsection 418(1); Insurance Companies Act, subsection 469(1); and the Cooperative Credit Associations Act, subsection 382.1 (1).

Return to footnote13referrer

Footnote 14
For the purpose of this guideline, all reverse mortgages, or any non-amortizing (revolving) credit product secured by residential property, are considered to be HELOCs.

Return to footnote14referrer

Footnote 15
Additional mortgage credit (beyond the LTV ratio limit of 65 percent for HELOCs) can be extended to a borrower.  However, the loan portion over the 65 percent LTV ratio threshold should be amortized.

Return to footnote15referrer

Footnote 16
Deposit-taking institutions establish a level of capital adequate to support the nature and level of an institution’s risk.  Each federally-regulated deposit-taking institution is responsible for developing and implementing its own ICAAP for the purpose of setting internal capital targets and developing strategies for achieving those internal targets that are consistent with its business plans, risk profile and operating environment. See OSFI Guideline E-19 Internal Capital Adequacy Assessment Process.

Return to footnote16referrer

New Mortgage Rules Jan 1 2018

For anyone looking to buy or refinance this may greatly impact your ability to borrow. For more information please contact me.

OSFI is reinforcing a strong and prudent regulatory regime for residential mortgage underwriting

OTTAWA – October 17, 2017 – Office of the Superintendent of Financial Institutions Canada

Today the Office of the Superintendent of Financial Institutions Canada (OSFI) published the final version of Guideline B-20 − Residential Mortgage Underwriting Practices and Procedures. The revised Guideline, which comes into effect on January 1, 2018, applies to all federally regulated financial institutions.

The changes to Guideline B-20 reinforce OSFI’s expectation that federally regulated mortgage lenders remain vigilant in their mortgage underwriting practices. The final Guideline focuses on the minimum qualifying rate for uninsured mortgages, expectations around loan-to-value (LTV) frameworks and limits, and restrictions to transactions designed to circumvent those LTV limits.

OSFI is setting a new minimum qualifying rate, or “stress test,” for uninsured mortgages.

  • Guideline B-20 now requires the minimum qualifying rate for uninsured mortgages to be the greater of the five-year benchmark rate published by the Bank of Canada or the contractual mortgage rate +2%.

OSFI is requiring lenders to enhance their loan-to-value (LTV) measurement and limits so they will be dynamic and responsive to risk.

  • Under the final Guideline, federally regulated financial institutions must establish and adhere to appropriate LTV ratio limits that are reflective of risk and are updated as housing markets and the economic environment evolve.

OSFI is placing restrictions on certain lending arrangements that are designed, or appear designed to circumvent LTV limits.

  • A federally regulated financial institution is prohibited from arranging with another lender a mortgage, or a combination of a mortgage and other lending products, in any form that circumvents the institution’s maximum LTV ratio or other limits in its residential mortgage underwriting policy, or any requirements established by law.


“These revisions to Guideline B-20 reinforce a strong and prudent regulatory regime for residential mortgage underwriting in Canada,” said Superintendent Jeremy Rudin.

Quick Facts

  • On July 7, 2017, OSFI published draft revisions to Guideline B-20 – Residential Mortgage Underwriting Practices and Procedures. The consultation period ended on August 17, 2017.
  • OSFI received more than 200 submissions from federally regulated financial institutions, financial industry associations, other organizations active in the mortgage market, as well as the general public.
  • The cover letter includes an unattributed summary of the comments and an explanation of how these issues were dealt with in the final Guideline B-20.
  • Following publication of Guideline B-20 OSFI plans to assess Guideline B-21 − Residential Mortgage Insurance Underwriting Practices and Procedures for consequential amendments.

Associated Links

About OSFI

The Office of the Superintendent of Financial Institutions Canada (OSFI) is an independent agency of the Government of Canada, established in 1987 to protect depositors, policyholders, financial institution creditors and pension plan members, while allowing financial institutions to compete and take reasonable risks.

Media Contact:
Annik Faucher
OSFI – Public Affairs 

Added Mortgage Rules Unnecessary

Added prescription to Canadian mortgage rules
unnecessary, could increase costs for

Requiring a stress test for Canadians who provide at least a 20 percent down payment to purchase a home is an unnecessary step that could negatively affect homebuyers across Canada, finds a new study by the Fraser Institute, an independent,
non-partisan Canadian public policy think-tank.
Canada’s financial regulator, the Office of the Superintendent of Financial Institutions (OFSI), wants to force homebuyers who do not require mortgage insurance – those who provide 20 per cent or more of the property’s value as a down payment – to
qualify for a mortgage two percentage points higher than the agreed upon rate.

“This proposed stress test for financially sound homebuyers is unnecessary and will do
more harm than good – Canadian homebuyers will pay the price,” said Neil Mohindra, a public policy consultant and author of Uninsured Mortgage Regulation: From Corporate Governance to Prescription.
The study finds the case for implementing the stress test is weak and not necessary given the existing supervisory framework. It is expected to produce several negative
effects including:
 Potential homebuyers could find their access to mortgages more limited,
especially in higher-priced markets.
 The stress test could force homebuyers away from their preferred homes to
less-desirable homes.
 Homebuyers may seek out less-regulated mortgage finance companies, which
are funded by private investors and charge higher interest rates.
 Homebuyers may be incentivized to choose shorter-term variable loans, which
are more vulnerable to rate fluctuations than longer-term fixed-rate mortgages.
 Canada’s mortgage industry could become less competitive. Some financial institutions that are niche players in the residential mortgage market (i.e. they focus on segments such as self-employed individuals) may find their ability to pursue their business strategies impaired. This runs counter to the federal government’s objective of promoting more competition from smaller banks.
Crucially, the rate of residential mortgage arrears in Canada—that is, when the borrower is more than 90 days behind with their payment – is virtually unchanged from 2002 and hasn’t exceeded 0.45 per cent, even during the 2009 financial crisis,
when the U.S. rate of arrears neared five percent. “OSFI’s emphasis on corporate governance worked well during the financial crisis. Shifting towards more prescriptive rules is an ominous sign,” Mohindra said.

Source: Fraser Institute
Neil Mohindra, Public Policy Consultant
To arrange media interviews or for more information, please contact:
Bryn Weese
Media Relations Specialist, Fraser Institute
(604) 688-0221 ext. 589

Read the full  research Bulletin HERE

First National Financial Corporation surpasses $100 billion in mortgages under administration

First National Financial Corporation announced it has crossed the $100 billion threshold in Mortgages Under Administration, a significant accomplishment that reflects the Company’s stature as a primary lender to Canadian homeowners and commercial real estate buyers.

“Achieving this milestone reinforces First National’s position as Canada’s largest non-bank mortgage lender and Canada’s largest CMHC multi-residential lender,” said Stephen Smith, Chairman and CEO. “We are proud of the role our Company has played in helping hundreds of thousands of Canadians to achieve their real estate ownership goals for almost 30 years. My sincere thanks to First National’s employees, our institutional partners, the mortgage broker community and our customers for making $100 billion a reality.”

A Canadian company, First National opened for business in Toronto in 1988 and has grown to become a nationwide lender across residential and commercial markets.

$100 billion of Mortgages Under Administration (MUA) reflects an investment in the properties owned by almost 300,000 single family borrowers and over 5,000 commercial borrowers,” said Moray Tawse, Executive Vice President. “That’s the equivalent of all of the homes in a city the size of Kitchener, so this is a significant milestone for us.”

All of the Company’s single family origination volumes come through the mortgage broker channel and mortgage brokers play a critical role in MUA growth.

“In serving borrowers and mortgage brokers, First National tries to go beyond what other lenders do to champion each opportunity,” said Scott McKenzie, Senior Vice President, Residential Mortgages. “We try to be a reliable delivery partner by responding to 90% of submissions in under four hours. Although we’ve grown, First National has never lost sight of what it takes to be a leading financial services provider.”

Of the Company’s now $100 billion book of business, commercial mortgages represent approximately 23%.

“First National is a case study in Canadian entrepreneurship,” said Jeremy Wedgbury, Senior Vice President, Commercial Mortgages. “It started with Stephen and Moray working together in a small office on Eglinton Avenue and now includes over 900 employees serving in five offices across Canada. Our entrepreneurial culture resonates with commercial borrowers who value the Company’s ability to solve problems, provide business advice and ultimately, get deals done faster and more efficiently than the competition.”

About First National Financial Corporation

First National Financial Corporation (TSX: FN, TSX: FN.PR.A, TSX:FN.PR.B) is the parent company of First National Financial LP, a Canadian-based originator, underwriter and servicer of predominantly prime residential (single-family and multi-unit) and commercial mortgages. With more than $100 billion in mortgages under administration, First National is Canada’s largest non-bank originator and underwriter of mortgages and is among the top three in market share in the mortgage broker distribution channel.  For more information, please visit

Forward-Looking Information
Certain information included in this news release may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by the use of terms such as “may”, “will, “should”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potential”, “continue” or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management’s future outlook and anticipated events or results, and may include statements or information regarding the future financial position, business strategy and strategic goals, product development activities, projected costs and capital expenditures, financial results, risk management strategies, hedging activities, geographic expansion, licensing plans, taxes and other plans and objectives of or involving the Company. Particularly, information regarding growth objectives, any future increase in mortgages under administration, future use of securitization vehicles, industry trends and future revenues is forward-looking information. Forward-looking information is based on certain factors and assumptions regarding, among other things, interest rate changes and responses to such changes, the demand for institutionally placed and securitized mortgages, the status of the applicable regulatory regime and the use of mortgage brokers for single family residential mortgages. This forward-looking information should not be read as providing guarantees of future performance or results, and will not necessarily be an accurate indication of whether or not, or the times by which, those results will be achieved. While management considers these assumptions to be reasonable based on information currently available, they may prove to be incorrect. Forward looking-information is subject to certain factors, including risks and uncertainties listed under ”Risk and Uncertainties Affecting the Business” in the MD&A, that could cause actual results to differ materially from what management currently expects. These factors include reliance on sources of funding, concentration of institutional investors, reliance on relationships with independent mortgage brokers and changes in the interest rate environment. This forward-looking information is as of the date of this release, and is subject to change after such date. However, management and First National disclaim any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

SOURCE First National Financial Corporation

For further information: Robert Inglis, Chief Financial Officer, First National Financial Corporation, Tel: 416-593-1100, Email:; Ernie Stapleton, President, Fundamental, Tel: 905-648-9354, Email:

Related Links

Ontario Expanding Protection for Consumers Making Big Purchases

Proposed Changes Improve Protections for Building a New Home and Buying Travel, Real Estate and Event Tickets

Ontario is introducing legislation that would, if passed, strengthen protection for consumers making significant purchases like buying event tickets or travel services, and purchasing or selling real estate, including newly built homes.

Tracy MacCharles, Minister of Government and Consumer Services, made the announcement today in Toronto.

The Strengthening Protection for Ontario Consumers Act would:

  • Strengthen confidence in Ontario’s new home warranties and protections by introducing significant changes, including the creation of two administrative authorities — one to administer the new home warranty program and one to regulate new home builders and vendors.
  • Introduce stronger rules and professional standards in the real estate sector, including new measures to address conflict of interest issues that arise in multiple representation situations and heavier fines for Code of Ethics violations by real estate professionals.
  • Further protect consumers buying travel services by enabling the creation of new rules for representations, such as advertising by out of province travel businesses that target Ontarians, creating new registration requirements for individual travel salespersons and improving compliance with the rules by enhancing enforcement tools, such as administrative penalties.
  • Help prevent ticket fraud and excessive markups in the resale ticket market, including banning ticket bots and the sale of tickets that were purchased using bots, capping the resale price of tickets at 50 per cent above face value, requiring businesses selling or reselling tickets to disclose key information to consumers and establishing new enforcement measures.

Strengthening consumer protection is part of our plan to create jobs, grow our economy and help people in their everyday lives.

Quick Facts

Background Information

Additional Resources

M3 Mortgage Group acquires Verico and becomes the largest mortgage brokerage in Canada

M3 Mortgage Group, the parent company of Multi-Prêts Mortgages, Mortgage Alliance, Invis and Mortgage Intelligence announced today that it has acquired Verico, one of the most storied independent mortgage brokers in Canada.

The addition further enhances the company’s standing as the largest, fastest growing non-bank mortgage originator across the country. In today’s new environment, scale matters. With more than 6,000 brokers now serving Canadians from coast to coast, the acquisition uniquely positions the group for accelerated investment in those critical success levers like branding, technology and marketing in support of brokers across the country.

“Today’s announcement is a game changer for us and the families we seek to serve because it gives us the scale and scope to truly transform the home financing space by offering a diverse range of solutions to all brokers,” said Luc Bernard, President & CEO, M3 Mortgage Group. “To have a great organization like Verico decide to join forces with us, affirms that our appetite for innovation and long-term growth is a winning strategy that will thrive in the attractive mortgage landscape for decades to come.”

Some notable facts on the exciting acquisition:

  • Increases the broker network to 6,000 across Canada (the largest in Canada)
  • Exceeds ambitious 3-year business plan to double loan volumes, loan growth and brokers by the end of fiscal 2017
  • Grows the group’s annual loan volumes from $25 billion to $44 billion
  • M3 Mortgage Group becomes the undisputed #1 non-bank mortgage originator in the country

“When I first met the group’s leadership team, it felt like I was looking in a mirror. Their technology driven, consumer obsessed DNA not only reflects our philosophy, but their values as an organization builds on our existing origination capabilities. That’s a win win for our brokers and their customers,” said Colin Dreyer, CEO, Verico.

“Simply put, it’s a great fit for us. It provides our folks with a unique opportunity to differentiate themselves in the competitive marketplace by joining forces with the largest, fastest growing non-bank mortgage originator in Canada, while maintaining the inherent principals that makes us successful… your business, your brand, your way,” said Albert Collu, President, Verico.

The M3 Mortgage Group is proud to welcome Colin DreyerAlbert Collu, the senior management team, and Verico’s independent mortgage brokers and their employees to our family.

As the #1 ranked mortgage brokerage in Canada, the M3 Mortgage Group will continue to leverage their industry leading position as the premiere brand in home financing to diversify, and expand into new financial service categories through the remainder of 2017 and beyond.

About The M3 Mortgage Group
The M3 Mortgage Group is the #1 non-bank mortgage originator and undisputed leader in mortgage brokerage across Canada. With more than 6,000 brokers and $44 billion in annual loan volumes, the technology driven, consumer obsessed group and its subsidiaries, Multi-Prêts Mortgages, Mortgage Alliance, Invis, Mortgage Intelligence and Verico have a single goal: be the best consumer ally when it comes to home financing for the many families it serves every year across the country.

About Verico Financial Group Inc.
VERICO was founded in 2005 with a single idea: to unite top mortgage originators in Canada and create additional opportunities for this group of highly driven professionals. Together, we knew we could make a mark on the Canadian mortgage industry. In 2010, we reached $10 billion in collective loan volume, a number that rivaled the mortgage business of the big 5 banks in Canada. Operating at the highest degree of professionalism, excellence and ethical standards, we originate over $13 billion by helping 45,000+ families annually with their mortgage needs.

Consumers Locking in Mortgages ahead of Bank of Canada Rate Hikes

The number of Canadians who applied for a fixed-rate mortgage in August saw a substantial spike, with 59.31% of users on the website opting for a fixed-rate mortgage over variable.

Historically, the majority of Canadians who shop for mortgage rates on opt for variable-rate mortgages. Since January 2014, 56.56% of users have gone variable, compared with 43.44% of those who go fixed. The shift in August is seen as a reaction to the Bank of Canada’s decision to raise interest rates. On July 12, the bank hiked rates by 25 basis points — the first upward move since 2010. Rates were again raised another quarter of a percent on September 6.

“It’s important for consumers not to panic,” said Justin Thouin, co-founder and CEO of “Data over the past 30 years shows that Canadians have saved more money on interest by going with a variable rate, rather than a fixed-rate mortgage.”

“Yes, a BoC rate hike means your mortgage payments go up if you have a variable-rate mortgage. And this causes some Canadians to overreact and do anything they can to switch to a fixed-rate mortgage,” Thouin adds.  “Doing this might buy you peace of mind if the thought of rising interest rates keeps you up at night.  But based on the past 30 years, staying in a variable rate mortgage is still the right choice in the long run if your goal is to pay as little interest as possible.”

Understanding The Impact of Rate Change

If a consumer purchases a home for $750,000 (with a down payment of 10 per cent amortized over 25 years), at a five-year, variable rate of 1.95 per cent, they would have a total monthly mortgage interest payment of $1,096.88 (keep in mind, this does not include additional costs such as mortgage insurance, principal payment or property taxes).  If the Bank of Canada increases its overnight rate by 25 basis points, that homeowner’s monthly interest payment on their mortgage would be $1,237.50 — an increase of $140.62 per month.

That same homeowner using a fixed mortgage rate — the most competitive fixed product on last month was 2.63% — would have a total monthly mortgage interest payment of $1,479.38.  While they can lock in that rate for five years, they’re still spending $241.88 a month more in interest compared with the variable product even after variable rates go up. That’s $2,902.56 a year in increased costs!

“Analysts have a wide range of opinions as to how many additional increases the BoC will make over the next 18 months, but until there is a substantial increase, the impact will be not that extreme,” says Thouin.

About is changing the way that Canadians think about personal finance. It’s a one-stop-shop for Canadians to compare offers on personal financial products quickly and easily from North America’s leading companies, including our partners at CAA, PC Insurance, and Scotiabank. has helped millions of Canadians explore their financial options and continues to work towards our goal of saving Canadians $1 billion in fees and interest.


8 Percent Returns for Syndicate Mortgage Lenders in Markham Low-Rise

Building and Development Mortgages Canada Inc. (BDMC) announced today and early exit for lenders in a syndicate mortgage that funded part of the York Downs development by Sunrise Homes and Fortress Real Developments Inc. (Fortress). Lenders received their principal back in full and an average annualized return of 8.81%.

Lenders were paid out through the sale of the townhouse project, located in York Downs/Angus Glen area, north of 16th Avenue, in the City of Markham. The approximately two acre luxury residential housing development was planned for 50 homes, split between traditional townhouses with 15′ feet of lot frontage and back-to-back townhouses with 21′ feet of frontage.

After closing on the property in August of 2016, new low-rise house prices in the Greater Toronto Area have skyrocketed in value, rising approximately 40% per Altus Group Data. Fortress and Sunrise indicated that offers to purchase the property began to come in almost immediately, as developers looked to capitalize on strong market conditions.

Markham is one of the most desirable locations for new housing in the Greater Toronto Area,” said Jawad Rathore, the CEO of Fortress. “At Fortress, we create value after we acquire lands, either through zoning, sales or construction. At the York Downs site, value was immediately realized by the intelligent assembly we executed with our partners at Sunrise Homes. We were also fortunate to take advantage of the significant increase in the low rise home market, and were able to achieve our value objective in a much shorter period than originally projected.”

The exit comes more than two years ahead of the loan term. BDMC principal broker Ildina Galati explained, “Lenders are seeing healthy returns on these early exits and this is a direct testament to the borrowers we work with, their experience, the strong due diligence they do in terms of understanding the market and the value they create for all stakeholders involved in the projects.”

This latest project is the 6th that has exited in 2017 and to date over $100 Million of lender principal has been paid back; average estimated annualized returns in the 23 exited projects is 9.27%. Projects have exited through a variety of mechanisms available to the development partnerships including, completion of the build-out with delivery of more than 1700 units, sale of the development site and refinancing of the project.

BDMC has closed over 14,000 lenders into syndicate mortgages in 80 projects across Canada. The projects range from high-rise residential to condo commercial projects offering a variety of tenures and built forms for them to choose from. Through BDMC, over $920 million has been funded into development projects to date with the projects having a built out value of $6 billion.

About the Companies

Building & Development Mortgages Canada Inc. – established in 2007, is a premier mortgage brokerage licensed in Ontario, Nova Scotia, AlbertaManitoba, British Columbia and Saskatchewan. BDMC closes all of the syndicate mortgage transactions that fund Fortress projects. For more information visit:

Fortress Real Developments Inc. is a Canadian real estate development company that seeks out and analyzes opportunities in major Canadian markets. The company is focused on quality projects with recognizable alpha in residential low-rise, high-rise, commercial and industrial market segments.

Ontarians Say Foreign Speculation Tax on Housing Was a Good Idea

New research about Ontarians’ voting intentions, housing policy sentiment being released today at Housing Summit

A large majority of Ontarians, 81%, support the introduction of a 15% Non-Resident Speculation Tax (NRST) on home purchasers who are not Canadian citizens or permanent residents, shows new research conducted by Ipsos and commissioned by the Ontario Real Estate Association (OREA), Ontario Home Builders’ Association (OHBA) and Federation of Rental-Housing Providers of Ontario (FRPO). Full study results are being released today at the Housing Summit, an initiative born of the three associations’ collective interest in keeping home affordability, consumer choice and housing supply a priority for political Parties in the 2018 election.

Sean Simpson of Ipsos Public Affairs will reveal Ontarians’ sentiment on a variety of housing related issues, including their impressions of the Fair Housing Plan and the importance of home affordability as an issue in the 2018 election. A fireside chat with Finance Minister Charles Sousa, and moderated by Steve Paikin, host of TVO’s The Agenda, will take place over the noon hour. Academia, economists, housing industry leaders, MPPs and senior government officials will take part in a full day of panel discussions on a range of housing topics. Click here to see a copy of the Housing Summit agenda.

As advocates for greater home supply and home affordability in the province, OREA, OHBA and FRPO have joined forces to ensure that these issues remain a priority for Party leaders and policy makers. The three associations say the solution to home affordability is increasing consumer choice and the supply of housing in the province by streamlining the building approvals process and reducing red tape, which is preventing new homes and rentals from coming to market.

To read a copy of the full Ipsos factum, visit


“Ontario’s Realtors are committed to working with government to keep the Canadian dream of home ownership within reach for every Ontarian. The ultimate solution is to increase the supply of housing in the marketplace including reducing the regulatory hurdles and red tape that unnecessarily delay projects and drive up costs.”

Tim Hudak, Chief Executive Officer, OREA

“As the industry that builds 95 per cent of all new housing in Ontario, home builders know that increasing supply is the key to improving affordability.”

-Joe Vaccaro, Chief Executive Officer, OHBA

“FRPO welcomes a fulsome discussion with government and all interested parties about the future of Ontario’s rental sector. This includes the need to provide a strong rental sector that meets housing needs.”

-Jim Murphy, Chief Executive Officer, FRPO

OREA represents 70,000 brokers and salespeople who are members of the 39 real estate boards throughout the province. OREA serves its REALTOR® members through a wide variety of professional publications, educational programs, advocacy, and other services.

OHBA is the voice of the land development, new housing and professional renovation industries in Ontario. OHBA represents over 4,000 member companies, organized through a network of 29 local associations across the province.

FRPO is the province’s leading advocate for quality rental housing. FRPO represents over 2,200 rental housing providers who supply and manage homes for over 350,000 tenant households across Ontario.

8-10 Ontarians Want to See Home Affordability addressed in the 2018 Election

New research shows a majority agrees that the provincial government needs to encourage more housing supply

Ontario political parties should address home affordability in their 2018 election platforms, according to 85% of Ontarians in new research conducted by Ipsos and commissioned by the Ontario Real Estate Association (OREA), Ontario Home Builders’ Association (OHBA) and Federation of Rental-Housing Providers of Ontario (FRPO). Six-in-ten Ontarians (63%) agree the provincial government needs to encourage more housing supply by reducing regulation, in order to provide affordable housing options for more Ontarians.

According to the study, millennials are most intent on seeing home affordability addressed by Party leaders. Nine-in-ten (90%) Ontarians between the ages of 18 and 34 want Parties to address the issue in the next election, compared to 82% of Gen X’ers. Furthermore, 9-in-10 (88%) millennials state that they would be more likely to vote for a Party whose platform promotes home affordability.

As advocates for greater home supply and home affordability in the province, OREA, OHBA and FRPO have joined forces to ensure that these issues remain a priority for Party leaders and policy makers by hosting thought leaders at the Housing Summit on Tuesday, June 13.

The three associations say the solution to home affordability is increasing the supply of housing in the province, and thereby consumer choice, by streamlining the building approvals process and reducing red tape, which is preventing new homes and rentals from coming to market. Nearly 7-in-10 (66%) millennials agree that the provincial government needs to encourage more housing supply by reducing regulation on the home building industry, the research shows.

Full results from the research study are being presented at the Housing Summit in Toronto. Academia, economists, housing industry leaders, MPPs and senior government officials, including Finance Minister Charles Sousa, are expected to come together at the Summit to discuss the issues facing Ontario’s housing market.


“The best way to get millennials out of mom and dad’s basement and into a home of their own is to build more housing that young buyers can afford. If they want to appeal to voters in the next election, all political Parties need to put home affordability and housing supply front and centre in their election platforms.”

Tim Hudak, Chief Executive Officer, OREA

“Ontarians still believe in the dream of home ownership, but the challenges of today’s housing supply keeps pushing their dream beyond reach. If political parties are serious about improving housing affordability, they need to let voters know how they’re going to help Ontarians achieve their dream.”

-Joe Vaccaro, Chief Executive Officer, OHBA

“New rental housing is needed across Ontario to assist with affordability and provide tenants choice. All parties need to support solutions and regulations that encourage new supply and investment benefiting tenants.”

-Jim Murphy, President & Chief Executive Officer, FRPO

OREA represents 70,000 brokers and salespeople who are members of the 39 real estate boards throughout the province. OREA serves its REALTOR® members through a wide variety of professional publications, educational programs, advocacy, and other services.

OHBA is the voice of the land development, new housing and professional renovation industries in Ontario. OHBA represents over 4,000 member companies, organized through a network of 29 local associations across the province.

FRPO is the province’s leading advocate for quality rental housing. FRPO represents over 2,200 rental housing providers who supply and manage homes for over 350,000 tenant households across Ontario.

Unexpected expenses big trouble for homeowners

The debt truth: Unexpected expenses could spell big trouble for Millennial homeowners

  • A significant percentage of Canadian homeowners lack the financial flexibility to adjust to rising interest rates, unexpected expenses or interruption of income, with Millennials most at risk, according to Manulife Bank survey
  • One in four Canadian homeowners have not had enough money on hand to pay bills once in the last 12 months while one in five are unprepared for a financial emergency
  • Average mortgage debt is up 11% to $201,000
  • Almost half of Millennial homeowners received help for their first homes

Mortgage debt increased by 11 per cent to $201,000 last year and more than half (52 per cent) of Canadian mortgage holders lack the financial flexibility to quickly adjust to unexpected costs, per a new Manulife Bank of Canada survey. This despite 78 per cent of Canadians having made debt freedom a top priority.

The problem is most acute among Millennials, who saw their mortgage debt rise more than any other generation. Millennials are also most likely to have difficulty making a mortgage payment in the event of an emergency or if the primary earner in the household were to become unemployed.

“The truth about debt in Canada is that many homeowners are not prepared to adjust to rising interest rates, unforeseen expenses or interruption in their income,” says Rick Lunny, President and Chief Executive Office, Manulife Bank of Canada. “However, building flexibility into how they structure their debt can help ease the burden.”

Overall, nearly one quarter (24 per cent) of Canadian homeowners reported they have been caught short in paying bills in the last 12 months. The survey also revealed that 70 per cent of mortgage holders are not able to manage a ten per cent increase in their payments. Half (51 per cent) have $5,000 or less set aside to deal with a financial emergency while one fifth have nothing.

Millennials not alone

Despite generally having more equity in their homes, many Baby Boomers face the same challenges as Millennial homeowners. Some 41 per cent of Baby Boomers said that home equity accounted for more than 60 per cent of their household wealth and for one in five (21 per cent) it makes up more than 80 per cent.

This indicates Boomers may need to rely on the sale of their primary residence to fund retirement, since much of their household wealth is wrapped up in home equity. However, more than three quarters (77 per cent) of Baby Boomer respondents want to remain in their current homes when they retire.

“Many Boomers approaching retirement share the same lack of financial flexibility as Millennials,” said Lunny. “They want to remain in their current homes, but their home makes up a big part of their net worth. Instead of downsizing, or even selling and renting, homeowners in this situation could consider using a flexible mortgage to access their home equity to supplement their retirement income.”

Helped into the housing market

Almost half (45%) of Millennial homeowners reported that they received a financial gift or loan from their family when purchasing their first home. By comparison, just 37 per cent of Generation X and 31 per cent of Baby Boomers received help from family members when they purchased their first home. Conversely, almost two in five (39 per cent) Boomers, many of whom are the parents of Millennials, still have mortgage debt.

The generational increase in new homeowners requiring family support comes despite a long-term trend toward two-income households. The number of Canadian families with two employed parents has doubled in the last 40 years, but housing costs are growing faster than incomes.

“With higher home prices and larger mortgages, it is more important than ever to find the mortgage that is right for you,” says Lunny. “A flexible mortgage that offers the ability to change or skip payments, or even withdraw money if your circumstances change, can help you ride out financial difficulties more easily.”

Manulife Bank recommends that Canadians have access to enough money to cover three to six months of expenses.

Quebec homeowners most at risk

In addition, the Manulife Bank survey found that:

  • Mortgage holders in Quebec (76 per cent) would have the most difficulty with an increase of 10 per cent to their mortgage payment and are more likely to be impacted should they have a fiscal emergency, as almost 30 per cent have no emergency funds.
  • British Columbia had the highest instance of homeowners getting help from family members when they purchased their first home, with almost half (45 per cent) saying they either borrowed or were given money.
  • Compared with other regions, homeowners in Manitoba and Saskatchewan (73 per cent) prefer most to own and live in their current home when they retire.

Debt management should begin at an early age

More than two in five (44 per cent) learned “a little” or nothing about debt management from their parents – and were also most likely to have been caught short financially in the past 12 months (28 per cent).

“Kids who learn about money and debt management are more likely to become financially healthy adults,” says Lunny. “One of the best lessons we can teach our children is the importance of saving for a rainy day. Being prepared for unexpected expenses is good for our financial health, good for our mental health and gives us the freedom and confidence to deal with the unexpected expenses and opportunities that come our way.”

About the Manulife Bank of Canada Debt Survey

This survey was conducted online within Canada by Nielsen on behalf of Manulife Bank of Canada from February 1 to 14, 2017, among 2,098 Canadian homeowners aged 20 to 69 with household income of $50,000 or more. The data were weighted by age, province of residence and household income where necessary to bring them in line with their actual proportions in the Canadian homeowner population.

About Manulife Bank

Established in 1993, Manulife Bank was the first federally regulated bank opened by an insurance company in Canada. It is a Schedule l federally chartered bank and a wholly-owned subsidiary of Manulife. As Canada’s first advisor-based bank, it has successfully grown to more than $22 billion in assets and serves clients across Canada.

About Manulife

Manulife Financial Corporation is a leading international financial services group that helps people achieve their dreams and aspirations by putting customers’ needs first and providing the right advice and solutions. We operate as John Hancock in the United States and Manulife elsewhere. We provide financial advice, insurance, as well as wealth and asset management solutions for individuals, groups and institutions. At the end of 2016, we had approximately 35,000 employees, 70,000 agents, and thousands of distribution partners, serving more than 22 million customers. As of March 31, 2017, we had $1 trillion (US$754 billion) in assets under management and administration, and in the previous 12 months we made almost $26.3 billion in payments to our customers. Our principal operations are in Asia, Canada and the United States where we have served customers for more than 100 years. With our global headquarters in Toronto, Canada, we trade as ‘MFC’ on the Toronto, New York, and the Philippine stock exchanges and under ‘945’ in Hong Kong.

FutureShare Helps Canadians Unlock Their Real Estate Wealth

Fintech Platform FutureShare Launches to Help Canadian Homeowners Unlock Their Real Estate Wealth

Alternative to HELOCs and reverse mortgages means homeowners don’t have to sell to tap into their home equity

There is more than $2.9 trillion in unmortgaged real estate equity in Canada (CREA), and today fintech platform futureshare launches to help Canadians unlock that real estate wealth without taking on new debt. The company was founded in 2016 as an alternative to home equity loans, home equity lines of credit (HELOCs) and reverse mortgages and gives homeowners a lump sum free of ongoing payments and interest rates in exchange for a percentage of the home’s appreciation, which can be paid out without penalty at any time or once the property is sold. futureshare’s online platform is the first of its kind in Canada and is now live in beta and accepting online applications for homes within Ontario with plans to launch in Alberta, Manitoba and British Columbia by the end of 2017.

“Canada’s housing market has billions in untapped equity and futureshare is giving that wealth back to Canadians to help them reduce financial stress and live happier lives. We’re revolutionizing the process by giving Canadians an alternative to home equity loans or HELOCs that’s interest rate and payment free, allowing them to unlock their real estate wealth and increase their cash flow,” said Michael Orrbrooke, CEO and founder of futureshare. “Whether it is, for example, for home improvements, debt consolidation, for funding retirement or investing in a small business, futureshare wants to help Canadians achieve their financial goals without adding new debt.”

The average Canadian owes $1.67 for every dollar in income (StatsCan), and futureshare is designed to help homeowners access the equity tied up in their home without adding to their ongoing debt burden. Unlike a reverse mortgage or HELOC, futureshare doesn’t require homeowners to have perfect credit scores or to fall within a specific income bracket, and it doesn’t increase monthly payments. A homeowner’s eligibility is based primarily on their home value and whether they have at least 25 per cent equity ownership in their home. Homeowners will be able to access on average up to 10-20 per cent of their home equity using futureshare’s platform, and unlike a loan, there’s no ongoing payments or interest rates.

Canada has become a hub for fintech innovation, with venture capital financing for fintech companies increasing by 74% from 2015 to 2016 (Thomson Reuters). Like other fintech platforms, futureshare’s process is simple and easy to complete online. Homeowners can use the online equity release calculator to see how much of their wealth they can unlock, and once they complete the 90 second pre-qualification questions, the homeowner receives a real-time conditional offer outlining the details of the equity release amount and terms they could receive. The home is then appraised and a final offer is sent via email by futureshare to the homeowner, with the credit application and underwriting process continuing online. Homeowners receive their funds, via electronic transfer, on average within 10-15 business days of signing the final offer.

Homeowners can use futureshare’s free qualification tool here to find out if they qualify in two minutes or less.

To learn more about futureshare, visit

Social media links:


About futureshare

futureshare provides an alternative to home equity loans, home equity lines of credit (HELOCs) and reverse mortgages, helping homeowners unlock their real estate wealth without having to sell their home. The online platform provides consumers with the opportunity to receive funds based on an appraisal on their home in exchange for a portion of their homes future appreciation, meaning that homeowners have zero ongoing payments, and incur zero interest. futureshare is currently available in beta in Ontario with plans to launch in Manitoba, Alberta and British Columbia by the end of 2017. futureshare is based in Toronto, and the platform launched in May 2017.


Ontario Passes Legislation for Home Inspections

Ontario Pension Plan

Ontario passed legislation today that will strengthen consumer protection by introducing new rules for home inspections.

The Putting Consumers First Act will:

  • Regulate the home inspection industry through mandatory licensing and proper qualifications for home inspectors, as well as minimum standards for contracts, home inspection reports, disclosures and the performance of home inspections.

Strengthening consumer protection is part of our plan to create jobs, grow our economy and help people in their everyday lives.

Quick Facts

  • Home inspectors are one of the only professionals involved in a real estate transaction that are not currently provincially regulated.
  • The proposed legislation to regulate home inspectors was based on 35 recommendations made by a 16-member expert panel, which were supported by both industry and consumers.

The ministry is seeking input on a proposal for legislation that would establish mandatory qualifications for home inspectors.

Currently anyone in Ontario can call themselves a home inspector. Many consumers depend on the opinions of their home inspector to make what is often the largest purchase decision of their lifetime.

In order to improve consumer protection in this important part of the home buying process, the Ministry of Consumer Services is consulting on a panel’s findings and recommendations to introduce mandatory qualifications for home inspectors.

The panel was established by the Ministry of Consumer Services and met for four months to discuss issues, consider options, and make recommendations on qualifications of home inspectors.

The panel has made thirty-five recommendations in five areas:

– regulation of home inspectors
– technical standards for home inspectors
– professional home inspector qualifications
– consumer protection requirements
– regulatory governance for Ontario’s home inspection industry

The Ministry of Consumer Services is now collecting public comments on the panel’s recommendations. The panel’s report with the recommendations is attached here and the ministry welcomes feedback and encourages anyone interested to provide comments.

The panel’s report and any public feedback the ministry receives will guide the government as it considers whether to bring forward legislation to establish qualifications for home inspectors.

Source: Ministry of Consumer Services