The next new mortgage regulation which comes into effect January 1, 2018 will require borrowers to qualify based on a rate that is 2 percentage points above the contract rate or the Bank of Canada posted 5 year rate (currently 4.89%) whichever is higher. The “stress test” criteria used to be for insured mortgages where homebuyers were putting less than 20% down. On January 1st, 2018 it will apply to all homebuyers!
The government felt these new rules along with previous regulations were necessary to ensure Canadians can afford their mortgage debt in the event interest rates were to rise over the coming years and as an attempt to slow the price appreciation particularly in larger Canadian cities.
It’s estimated that 1 in 6 homebuyers could be affected by this new qualification requirement and would either have to put more money down, purchase a less expensive home, or simply look at other possible options.
Regardless if you are affected by the new rules or not, getting a mortgage just seems to be getting more complicated and having the expertise of a mortgage professional on your side matters now more than ever. There are a variety of options and solutions to help you get into the home of your dreams including access to lenders such as credit unions, Mortgage Investment Companies (MICs), etc.
As a mortgage professional I know how important home ownership is for many and helping people find the right mortgage that fits their situation is what I do best. Again, the new rules come into effect January 1st, 2018 so if you’re looking to buy or refinance, let’s get ahead of the changes and see what we can do today.
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