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At the beginning of this year, new tighter mortgage rules were put out by The Office of the Superintendent of Financial Institutions (OSFI). This has made it more difficult for some homebuyers to get mortgages this year. 

The new rules have stricter qualifying criteria as the requirement for a mortgage stress test is now extended to all homebuyers. Even borrowers with a down payment of twenty per cent or more now face a stress test, as has been the case since January 2017 for applicants with smaller down payments who require mortgage insurance. This is aimed at limiting the amount of debt that Canadians and financial institutions take on.

So what is the stress test? It means that financial institutions would use either the five-year benchmark rate published by the Bank of Canada or the customer's mortgage interest rate plus 2 per cent - whichever is higher. This is to ensure that borrowers’ housing expenses compared to their income remain below a certain threshold even if rates rise. Financial institutions look at the size of the loan compared to the price of the house as well as credit scores.

For some first-time homebuyers these stricter mortgage lending rules mean you might need to rent for longer before you can buy a home. Or you might need to consider getting a co-signer to qualify under these stricter rules. This may cause others to have to settle for a less expensive home than they would have qualified for in the past, and some people may choose to wait and save up for a larger down payment.

Are you a first-time homebuyer? Get in touch to discuss how I can help you on your journey to home ownership! Call me at (905)330-5201 or by email at mariongoard@kw.com


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Testimonials

  Marion had completed a number of sales in our community -- and she had worked very hard to have a professional and supportive presence there. When we first contacted Marion, we were a long time away from wanting to/being able to take action. She worked with us throughout this period and provided very helpful market research. along with specific information about prospective properties for us once we were ready to sell. The production of sales material on our home was creative and impressive. She was able to capture its special features, and showcased beautifully the expansiveness of the property. We enjoyed working with Marion. She was patient and supportive and understood that the second half of our initiative (the purchase) was just as important as the first. Thank you, Marion.

Carol Kalbfleisch, Burlington

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