What are Loan-to-Income (LTI) limits and how will they affect institutional mortgage portfolios?
OSFI is introducing Loan-to-Income (LTI) limits to reduce risks from high household debt in institutional mortgage portfolios .
These limits, which take effect in fiscal Q1 2025, apply to portfolios, not individual borrowers.
Key Points
New rules limit how much risk lenders can take on their overall mortgage business.
These changes won't directly affect your ability to get a mortgage or renew your existing mortgage.
Lenders are expected to follow these new rules starting in early 2025.
The government will keep an eye on how well these limits are working.
The government may rethink the mortgage stress test after these new rules are in place, as they both aim to ensure responsible lending.
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Related Questions
How does mortgage insurance enable lower down payments?
Mortgage insurance lowers the risk for lenders, allowing them to offer mortgages to borrowers with down payments between 5% and 20%.
How will lenders evaluate my debt service ratios, and what key factors are considered?
Lenders assess your ability to repay the mortgage by calculating your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios.
What property considerations impact my mortgage application?
Lenders carefully assess the property's value and characteristics, directly influencing the loan amount you can secure.
How does the 'straight switch' exemption benefit you at renewal?
The 'straight switch' exemption lets uninsured mortgage borrowers move their mortgage to a new federally regulated lender (FRFI) at renewal without needing to pass the Minimum Qualifying Rate (MQR) .