On July 11^th, the OSFI launched a consultation on proposed changes to the Capital Adequacy Requirements (CAR) Guideline and the Mortgage Insurer Capital Adequacy Test (MICAT). According to OSFI, the narrow word changes aim to help lenders and mortgage insurers address risks related to mortgages in negative amortization, where payments are insufficient to cover the interest portion.  

This situation may occur in an increasing interest rate environment if payments on a variable interest rate mortgage are insufficient to cover the increased interest component. The proposed changes would be effective in fiscal Q1 2024 (November 1, 2023, for institutions with an October 31 year-end and January 1, 2024, for institutions with a December 31 year-end).  

CCUA’s system brief is available here. Feedback is welcome up to August 4^th.

Please contact Morgan Paulgaard for information. If your credit union intends to provide comments, please let CCUA know as soon as possible.