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.