BREAKING MORTGAGE NEWS! Ottawa Announces Tighter Mortgage Rules

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BREAKING MORTGAGE NEWS! Ottawa Announces Tighter Mortgage RulesThe Federal Government has announced yet another important mortgage rule change in efforts to cool the housing market by implementing what they call a “stress test.”

In other words, qualifying for a mortgage just got a whole lot more difficult.

Effective October 17th, all insured mortgages are required to QUALIFY for their mortgage using the current Bank Of Canada Benchmark rate of 4.64% compared to using the ACTUAL rate that currently ranges from 2.39% – 2.44%.

Any clients that are currently in the market to purchase or refinance but have not yet made an offer or committed to a live mortgage need to RE-QUALIFY immediately.

UNDERSTANDING THE NUMBERS

Let’s put this new rule into perspective…

A couple with a $100,000 income, no debts, and 5% down payment can currently qualify for a $484,000 home purchase using the current 5 year fixed rate of 2.44%.

That same couple having to qualify at the bench mark rate of 4.64% now qualifies for a $421,456 home.

That is $62,544 less buying power.

All in effect by Oct 17th.

Now more important than ever is the importance of working with a mortgage broker. Whether it a first-time home buyer or someone looking to sell their current home, you need to get pre-qualified before listing a house for sale and before making an offer on a new house. Talk to your mortgage broker today.

For more information on the changes, read these updates:

Department of Finance Canada: Backgrounder: Ensuring a Stable Housing Market for All Canadians

Department of Finance Canada: Minister Morneau Announces Preventative Measures for a Healthy, Competitive and Stable Housing Market

CBC News: Ottawa tightens mortgage requirements and targets foreign money

Title image credit to CBC News (Adrian Wyld/Canadian Press)

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