OSFI rule changes may lead to Spike in Reverse Mortgages

With the expectation that first-time homebuyers will be shuttered out of the housing market, thereby reducing the number of people to whom seniors can sell their homes, reverse mortgages might begin surging next year. OSFI’s new lending rules are widely expected to affect first-time buyers more than any other buying cohort, and the ripple effect it can have through the marketplace could result in seniors being stuck in their homes, rather than pulling out equity and retiring. Yvonne Ziomecki, the executive vice president of marketing and sales at HomEquity Bank, says the new borrowing rules coming into effect on January 1 will give the reverse mortgage market an indirect boost. “If there are less people qualifying for conventional mortgages, therefore, there are less buyers in the marketplace, then our clients 55 years and older will have fewer buyers to sell to,” she said. “There are [younger] buyers in the market who may not be able to qualify under the new rules. They may be looking to their family for a larger down payment so that they look better to lenders.”

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