Canada's OSFI Keeps Mortgage Income Limits, Warns on Trade-Driven Credit Risks

Canada's Office of the Superintendent of Financial Institutions is keeping in place its loan-to-income limit framework for mortgage lending, having confirmed earlier in 2026 that the measure would continue after judging it had met its prudential goals. The limits are designed to guard against a build-up of high household leverage within lenders' mortgage portfolios, particularly during periods of low interest rates, and to reduce systemic risk. In its risk outlook for the current fiscal year, the regulator said it would keep conducting supervisory reviews of lenders with significant residential mortgage exposures to assess the adequacy of their controls and risk-management practices. OSFI also warned that a difficult trade environment continues to weigh on economic growth and labour markets, increasing pressure on borrowers' ability to keep up with payments. For banks, these conditions heighten credit risks, especially in residential secured lending, corporate credit and commercial real estate. The regulator urged proactive account and portfolio management, including engaging early with borrowers vulnerable to renewal shock and ensuring collateral valuations reflect current market prices. The stance underscores continued caution about household debt and credit quality as global uncertainty persists.