“Straight Switches” and portfolio insurance

The government is amending the mortgage insurance rules to remove the requirement to apply the minimum qualifying rate on low-ratio mortgages that switch from a federally regulated lender to any new lender at renewal, effective December 16, 2024.

The government is amending the mortgage insurance rules to remove the requirement to apply the minimum qualifying rate on low-ratio mortgages that switch from a federally regulated lender to any new lender at renewal, effective December 16, 2024.

The proposed parameters align mortgage insurance rules with the Office of the Superintendent of Financial Institutions' decision to waive the minimum qualifying rate requirement on uninsured mortgages when a borrower switches from one federally regulated lender to another at renewal.

Proposed Parameters

• This measure will remove the minimum qualifying rate requirement for low-ratio (i.e., loan-to-value up to 80 per cent) renewals which satisfy the following "straight switch" criteria:
  • The borrower's mortgage was originated at a federally regulated financial institution and previously assessed against the minimum qualifying rate.
  • The borrower will renew their mortgage with a new lender at renewal.
  • The borrower has maintained the existing contractual amortization schedule.
  • The borrower's unpaid principal balance may be increased by $3,000 to cover related transaction costs such as penalties or fees. Equity take out is not permitted.  
• Effective date: This measure will be available for mortgage insurance applications that lenders submit to mortgage insurers on or after December 16, 2024.
• All other eligibility criteria for government-guaranteed mortgage insurance will continue to apply.