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A longer amortization period reduces the monthly payment at a given interest rate, meaning loan providers could extend amortizations from 25 to 35 years, potentially create a smaller monthly payment that would qualify more buyers.

“You can increase the amortization and clearly you can go longer,” said a source, adding he didn’t expect the major banks to take advantage of the loophole. “This was done to release some of the pressure (from increased stress testing).”

The real estate industry had been lobbying heavily for some last minute changes and OSFI said it received more than 200 submissions from federally regulated financial institutions, financial industry associations, other organizations active in the mortgage market, as well as the general public.

A report from Toronto-Dominion Bank said the stress test will likely further slow housing activity, depressing demand by five per cent to 10 per cent once implemented on Jan. 1, 2018.

The amortization change could mitigate the impact. Rob McLister, founder of ratespy.com says the crackdown is close to a wash if lenders use the loophole.

Assuming you’re making $60,000 a year, have no debt and 20 per cent down, based on a stress test of the contract rate plus 200 basis points, consumers now qualify for 18 per cent less loan, said McLister. But increasing amortization from 25 years to 30 qualifies you can buy roughly 10 per cent more house. Jumping from 25 to 35 amortization gets you to 18 per cent more house, he says.