OTTAWA -- Canada's federal financial regulator is proposing new rules for mortgage insurance companies to better assess the risks of borrowers and deal with hot real estate markets.

The Office of the Superintendent of Financial Institutions released its draft advisory for public consultation on Friday.

The regulator has proposed a new standard approach to assessing risk that incorporates indicators including creditworthiness, remaining amortization and outstanding loan balance.

The new capital requirements also include a base amount that applies to all mortgages plus a supplemental amount that will apply when home prices are high relative to borrower incomes.

Superintendent Jeremy Rudin says when house prices are high relative to borrower incomes, the new framework will require that more capital be set aside.

"Ultimately this will continue to provide a level of protection to both policyholders and unsecured creditors," Rudin said in a statement.

The draft advisory is open for comments until Oct. 21, with the new rules set to take effect starting in January.

OSFI says the current capital requirements for mortgage insurance risk were developed in the early 1990s and last updated almost 15 years ago.