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Department of Finance Announces New Mortgage Rate Stress Test

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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