Former Finance Minister Jim Flaherty tightened Canada’s mortgage insurance rules four times in the wake of the financial crisis. The most recent set of changes took place in July 2012 and, among other things, capped the maximum length of an insured mortgage at 25 years.
Mr. Flaherty made changes that he felt were necessary to keep consumer debt loads and house prices from rising too quickly. The changes were very specific – for instance cutting amortizations and saying that homes over $1-million weren’t eligible for government-backed insurance. Beyond his concerns about debt levels and home prices, Mr. Flaherty also had an interest in limiting the amount of exposure that taxpayers were building up to the housing market. The government backstops the vast majority of the country’s mortgage insurance.
OSFI, on the other hand, is responsible for keeping the country’s financial institutions in good shape and minimizing the impact that the collapse of a bank or insurer would have. The guidelines it released for mortgage insurers on Monday are broader and less specific. They outline the minimum steps that mortgage insurers should be taking to ensure that they are minimizing their risks.