Clicky

More Mortgage Changes Ahead!

Last week the government announced yet another set of rule changes that will impact the conventional mortgage market; those who have at least 20% equity/down payment on their property.  They have implemented what is called a “stress test”, effective January 1/18.

In order to qualify for a mortgage, the financial institution will have to add 2% to the rate and then determine if the qualifying ratios are in line.  The added 2% will significantly increase debt service ratios, which is not a good thing.  Currently mortgage clients are qualified at the contract rate.  So for example, if the contract rate today for a 5 year fixed is 3.5%, then that is also the qualifying rate.  Come January 1 if the contract rate is 3.5% the qualifying rate will be 5.5%.  Just a note, the effective rate will always be the contract rate.

This could seriously limit the purchasing power for a significant number of mortgage applicants and others may not be able to qualify for a mortgage at all.  If you or someone you know are considering buying a property or refinancing an existing mortgage, I highly recommend that you do not wait until January to get approved.

Please contact me today if you have questions/concerns about the changes.  I’d be happy to explain further.  DonnaL@dominionlending.ca or 905.336.3545

You May Also Like

Four-Month Home Sales Gain ends in September

Here is a great article from DLC’s Chief Economist Sherry Cooper regarding home prices, house listings, and rent. Four-Month Home Sales Gain Ends in September

Millennials: How to get into the Housing Market

This particular period in time might be the most difficult ever for a Millennial to buy a home.  There are several factors at play here working against them; stagnant incomes, high home prices and the stress-test introduced by the Liberal government on January 1/18. In 1976 the average median income for 25-34 year olds was… Read More…

Bank of Canada Set to Raise Qualifying Rate

On Monday, May 14 the Bank of Canada will be raising the qualifying mortgage rate for prime mortgages to 5.34%.  It currently sits at 5.14%.  This will affect borrowers wanting a variable rate the most.  If you’re wanting to qualify for a mortgage before the rate increases, you only have a couple more days left. … Read More…

Recent Posts