Starting January 1, 2018, Canadian home buyers will need to meet stiffer guidelines in order to qualify for a mortgage with a federally regulated mortgage lender.
The rules now require the minimum qualifying rate for uninsured mortgages to be the greater of the five-year benchmark rate published by the Bank of Canada (presently 4.89 per cent) or 200 basis points above the mortgage holder’s contractual mortgage rate.
The new rules will implement no matter how much money the buyer puts down as a down payment, they will have to pass the stress test. Resulting in a 20 per cent decrease in affordability, meaning a first-time home buyer will be able to buy 20% less house.
An Example.
A family with an annual income of $100,000 with a 20 per cent down payment at a five-year fixed mortgage rate of 2.83 per cent amortized over 25 years can currently afford a home worth $726,939.
Under new rules, they need to qualify at 4.89 per cent.
They can now afford $570,970
A difference of $155,969 (less 21.45 per cent).
Speak to one of the Whistler Mortgage Brokers to help give you the professional advice you need.
