The Workplace of the Superintendent of Monetary Establishments (OSFI) says Canadian lenders stay resilient regardless of a danger surroundings clouded by commerce tensions, rising unemployment and ongoing housing market pressures.
In its fall semi-annual replace to the Annual Danger Outlook (ARO), the regulator warned {that a} weaker financial system is weighing on money flows, collateral values and confidence.
OSFI pointed particularly to the uncertainty surrounding tariffs, which has slowed exercise amongst lenders, debtors, customers and suppliers. “The dearth of readability on tariffs is producing unease amongst customers and companies dealing with an outlook extremely delicate to the outcomes of the on-going negotiations,” the report stated.
Housing market strains deepen
OSFI additionally highlighted ongoing weak point within the housing market, the place exercise stays under 10-year averages and costs proceed to melt.
“The condominium market in Canada, particularly within the GTA and GVA areas, is underneath stress and has deteriorated additional for the reason that situation was highlighted within the spring ARO,” the regulator famous.
Delinquencies are additionally climbing again towards pre-pandemic ranges, significantly in fixed-payment variable-rate mortgages, self-employed loans and investor portfolios.
Toronto is main main centres in delinquency charges, whereas the condominium section has emerged because the weakest hyperlink available in the market. Oversupply in new multi-unit building is driving down costs and will scale back investor urge for food for future tasks—pressuring each collateral values and employment within the building sector.
Though the chance of mortgage cost shocks has eased considerably because of seven Financial institution of Canada charge cuts since June 2024, OSFI cautioned {that a} subset of debtors renewing loans originated at traditionally low charges will nonetheless face vital will increase.
As of Could 2025, practically one-third (31%) of all excellent mortgages will renew by 2027, OSFI stated.
Regulatory give attention to underwriting and liquidity
In response, OSFI stated it’s stepping up its oversight of mortgage underwriting, together with Guideline B-20’s requirements on prudent lending and the usage of blanket value determinations. This summer time the regulator strengthened expectations round well timed and substantiated property valuations to make sure collateral values are reasonable.
It’s also monitoring how lenders are adapting to the newly launched loan-to-income (LTI) measure and the way they’re managing dangers tied to variable-rate fixed-payment mortgages.
“We’re intently inspecting adherence to the newly applied loan-to-income measure and assessing mortgage lenders’ VRMFP danger administration practices,” the report stated.
On the funding aspect, OSFI is advancing revisions to its Liquidity Adequacy Necessities and an Inner Liquidity Adequacy Evaluation Course of, with extra consultations to comply with in 2026. The regulator can also be paying nearer consideration to how establishments handle liquidity at their overseas operations.
“Given our issues about surprising financial outcomes, and the potential for broad monetary market pressure as a consequence of continued uncertainty, we’re targeted on institutional preparedness for stress occasions,” OSFI stated.
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blanket value determinations condominium market delinquencies fixed-payment variable mortgages housing dangers loan-to-income cap LTI Workplace of the Superintendent of Monetary Establishments OSFI laws regulator
Final modified: October 9, 2025
