Happy New Year! We are looking forward to a fantastic 2018.
The new mortgage rules are officially in place and there is still a lot of confusion about who is going to be affected by these new rules. Even on the news there was information provided that is just not true. Here is a simplified breakdown on mortgage qualification:
1. High ratio, less than 20% down payment, mortgage qualification does not change at all. This rule has been in place for over a year now.
2. People buying a primary or secondary residence with 20% down or more, that can qualify at the Bank of Canada posted rate and a 25 year amortization, will see no change. This group is called "Insurable" and has been in place the same length of time as the high ratio purchasers. This group gets preferred rates when compared to the next group so we try and do this as much as we can already.
3. The only change is with the "Uninsurable" mortgages. People that need contract rate and/or 30 year amortizations to qualify. This also includes rentals, refinances and purchases over $1 million. This group will have their purchasing power decreased with the new rules.
4. This does nothing to renewals as they are not re-qualified. It can make it tougher to switch to a new lender if they fall under the "Uninsurable" label.
When you look at the whole mortgage market, the rule changes that came in yesterday are just closing up a small group of home owners that were able to slip through the rule changes from October of 2017. They were able to get a mortgage without a stress test but they paid for this through higher rates. Now everyone falls under pretty much the same or similar guidelines which includes the "Stress Test".
Still not sure how or if these changes will affect you? Please do not hesitate to contact us anytime.
This article is in the category: General.