An investor is financing a $2,000,000 purchase with 25% down through a private lender that is not federally regulated. OSFI's minimum qualifying rate (the stress test) for uninsured mortgages is a requirement on which lenders?
Correct Answer
C) Federally regulated lenders such as banks
OSFI states that it obliges federally regulated lenders to apply the minimum qualifying rate for uninsured mortgages, currently the greater of the contract rate plus 2% or 5.25%. A private lender that OSFI does not regulate is not bound by that requirement, which is one reason some borrowers turn to alternative lenders.
Why This Is the Correct Answer
OSFI's own page describes the minimum qualifying rate as a stress test it obliges federally regulated lenders to apply. Its reach is defined by OSFI's supervisory jurisdiction.
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