Loan-to-Value (LTV) Ratio Management: Risk-Adjusted Limit Structures
FRFIs must establish LTV limit structures aligned with the risk profiles of various mortgage types, as outlined in their Residential Mortgage Underwriting Policy (RMUP).
OSFI expects average LTV ratios to remain below stated maximum thresholds. Mortgage insurance is mandatory for mortgages exceeding an 80% LTV ratio.
Technical Research Verification
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Related Questions
How does the stress test differ for fixed vs. variable in 2026?
Both are stress-tested at the higher of the benchmark (5.25%) or the contract rate + 2%.
Why are 3-year fixed rates dominating the 2026 market?
Borrowers are hesitant to lock in for 5 years at current levels, but find 1-2 year rates too expensive.
Fixed vs. Variable Comparison Table
Fixed locks a 5-year rate with IRD penalty risk; variable floats with prime and typically caps break fees at 3 months interest.
What is the 'IRD' penalty risk for 5-year fixed borrowers?
The Interest Rate Differential (IRD) can cost tens of thousands if you break a fixed mortgage when market rates have dropped.