OSFI proposes mortgage capital changes for banks to keep up with soaring house prices and debt

, International

The OSFI says updates are needed to keep capital requirements prudent when house prices are high relative to Canadians’ income.

Canada’s top bank regulator is proposing changes to the amount of capital the country’s biggest financials institutions must hold against residential mortgages to keep up with the rapid rise of house prices and highly leveraged buyers in some markets.

The proposed revisions first discussed by the Office of the Superintendent of Financial Institutions in December — in tandem with federal changes to down payment levels for certain home purchases relying on government-backed mortgage insurance — are to become effective in November following a public comment period.

“These updates will ensure that capital requirements remain prudent in periods where house prices are high relative to household income and/or house prices are increasing rapidly,” OSFI said in a statement Friday.

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