Late 2017, the government announced that they would be enforcing stricter mortgage rules across the board for Canadians. Until this time, only borrowers with less than 20% down were subject to this tighter qualification process. The new rule goes as such: All borrowers with less than 20% down (insured or insurable deals) must qualify at a rate of 5.14% over a maximum of 25 years. All borrowers with greater than 20% down, must qualify at the greater of the 5.14% or 2% higher than the contract rate (or more simply, the mortgage rate they are offered).
The result of these stricter rules? Borrowers are qualifying for almost 20% less of a mortgage they would have prior to January 1, 2018.
Having now pushed through the first quarter of 2018, we are noticing the impact these rule changes are having on potential borrowers.
If you are thinking about purchasing or refinancing this year, or, if you have a mortgage coming to its maturity, be sure to reach out now to discuss your options.