Banks warned on 'blanket appraisals'
Regulatory scrutiny is rising after social posts highlighted OSFI warnings about lenders using 'blanket appraisals' to inflate property values and skirt lending limits—an issue flagged as a material risk to underwriting integrity reported. The thread argues these practices could mask true LTVs and elevate portfolio credit risk.
OSFI’s July 17, 2025 backgrounder explicitly warned that blanket appraisals risk a timing mismatch between valuation date and mortgage origination and noted the practice “would not meet” OSFI expectations if valuations didn’t reflect current price levels. osfi-bsif.gc.ca Meeting minutes obtained by Reuters show OSFI raised the issue with chief risk officers in an October 2025 roundtable and warned blanket appraisals could push uninsured mortgages past the 80% loan‑to‑value limit under the Bank Act, a concern Reuters reported on March 9, 2026. msn.com Royal Bank of Canada updated its pre‑construction mortgage wording to read “At RBC, we offer mortgage approvals based on the closing date provided by the builder” on its site after the regulator meetings, and the Canadian Bankers Association said it is in discussions with OSFI about evolving expectations. rbcroyalbank.com OSFI’s backgrounder quantifies the exposure: newly built condos were 1.2% of mortgage originations between 2022–2024 and 1.4% of outstanding mortgages as of February 2025, even as internal minutes flag pre‑construction prices in some projects down roughly 10%–30% from 2022 peaks and a cited national price decline of about 2.7%. osfi-bsif.gc.ca OSFI told institutions to apply Principle 4 of Guideline B‑20—specifying minimum recency, frequency and robustness for valuations—in its July 17, 2025 note, and told Reuters it handles breaches through private “resolution and remediation activities” with lenders. osfi-bsif.gc.ca
