Phone: 250-212-2654 | cecile@cecileguilbault.com

 
Back to Blog

Update #2

 

CHANGE 1: QUALIFYING RATE STRESS TEST TO ALL NON INSURED MORTGAGES

 

Non insured mortgage consumers (buyers with a 20% or greater down payment) must now qualify using a new minimum qualifying rate. The minimum rate will be the greater of the five-year benchmark rate published by the Bank of Canada OR the lender contractual mortgage rate +2.0%.

How does this affect the mortgage consumer with a down payment of 20% or more? The biggest impact will be on the amount in which the homebuyer will be able to qualify. Previously, the homebuyer qualified at the rate offered by the lender. Now, the homebuyer must qualify at the benchmark rate which is the higher of the Bank of Canada Rate (currently 4.89%) OR the rate from the lender plus 2%. This applies to all terms, fixed and variable rates.

 

For example:

Mortgage Amount $400,000
If Contract Rate is 3.44%

 

BEFORE CHANGES


Monthly Payment $1,985.00
Minimum Income* $70,000

 

AFTER CHANGES


Benchmark Rate 5.44% (3.44% + 2%)
Monthly Payment $2,427.00
Minimum Income* $85,000

*The above is based on 35% GDS RATIO (Gross Debt Service Ratio) and a 25 year amortization.

STRESS TEST SUMMARY


UNINSURED MORTGAGES Homebuyers/owners qualify for a mortgage using the benchmark rate, which is the Bank of Canada rate (currently 4.89%) OR the lender rate +2%, whichever is greater.

 

INSURED MORTGAGES You must qualify for a mortgage at the Bank of Canada rate (currently 4.89%)

 

OSFI has implemented 3 new mortgage rule changes starting January 1, 2018

 

Comments

No comments

Post Your Comment:

*indicates required fields.
Your Name:*
Please note, your email will not be shown publicly
Your Email (will not be published):*
Comment:*
Please type the text as it appears above:
The trademarks MLS®, Multiple Listing Service® and the associated logos identify professional services rendered by REALTOR® members of CREA to effect the purchase, sale and lease of real estate as part of a cooperative selling system.
MLS®, REALTOR®, and the associated logos are trademarks of The Canadian Real Estate Association.