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Archive for October 13th, 2016

Department of Finance Announces New Mortgage Rate Stress Test

Thursday, October 13th, 2016

Recently, Canada’s Department of Finance announced new measures related to the housing market to address long-term housing affordability.

 
1] All new mortgages that are insured – whether high or low ratio -will be subject to a mandatory mortgage rate stress test. For example, all insured mortgages will be tested at the higher rate (latest Bank of Canada 5 year fixed rate – 4.6%), instead of the lower market rates which are generally available (2.5%).

 
**Prospective buyers who may have qualified for a mortgage prior to these rules may not be able to qualify now at that same sale price.

 
2] Regulators are banning a wide array of mortgages from being insured. (thereby limiting options for prospective buyers)

If you are currently in the market to buy a new home it may be a good idea to sit down once again with your banker or mortgage broker to discuss how these changes affect you.

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