Canada's Office of the Superintendent of Financial Institutions on Oct. 17 released its final version of the residential mortgage underwriting practices and procedures.

The revisions, which take effect Jan. 1, 2018, require uninsured mortgages to have a minimum qualifying rate equal to the Bank of Canada's five-year benchmark rate or the contractual mortgage rate plus 2%, whichever is greater.

The guidelines also require lenders to enhance loan-to-value measurements and limits, in consideration of changes to the housing market and economic environment. Among the changes is a prohibition on arrangements between lenders that may be designed to circumvent loan-to-value regulatory limitations.

Following the guidelines' release, First National Financial Corp said it would be subject to the changes despite not being a federally regulated financial institution and that it expects all mortgage lenders to see a decline in conventional single-family market activity. First National clarified that, in the nine months ended Sept. 30, its uninsured single-family mortgage originations amounted to C$4.2 billion. Approximately C$1.0 billion of the amount will be impacted by the changes. Affected borrowers would have needed to lower their mortgages by about C$100 million in total to qualify under the new rules, it added. Little to no impact on 2017 or 2018 earnings is anticipated.