New Mortgage Rules October 17th 2016

 by Brendan Perry, Mortgage Professional 604.931.4719

An example of the new mortgage stress test beginning October 17th.

The most basic policy change will impact buyers with less than 20% down (high-ratio borrowers).  Currently, those borrowers can qualify based on a bank’s 5-year fixed rate.  The new rules, however, will require borrowers to qualify on the Canadian benchmark rate, which is currently 4.64%.  This will significantly limit a borrower’s buying power.

Current Qualification

Annual Income $100,000

Down Payment $42,500

Qualifying Rate 2.39%

Maximum Mortgage $617,500

Purchase Price $660,000

New Qualification

Annual Income $100,000

Down Payment $42,500

Qualifying Rate 4.64% (stress test)

Maximum Mortgage $487,500

Purchase Price $530,000

This may impact your borrowing capability by $130,000 - it may be important for you to get your pre-approval done before the new rules are implemented. Contact Brendan - details above.

*All figures should be taken as estimates until credit, income, and employment verification is completed.