If You Don’t Buy a Home Before Dec 31, 2017, You May Never be Able To

The hammer was dropped yesterday, and it could be enough to diminish home ownership for some buyers – forever.

A new mortgage “stress test” comes into effect January 1st, 2018 for all mortgages funded with 20% or more.  Previously stress tests only affected mortgages insured by CMHC (less than 20% down) but now it seems that everyone needed a mortgage will be affected in some way or another.

Here’s an example of the magnitude of these changes;

A family with a combined $100,000 annual income
20% downpayment
5 year fixed term
3.09% interest rate
25 year amortization

Mortgage approval;

Today, and up to Dec 31, 2017
$706,692

Jan 1, 2018
$575,000

The loss in buying power is staggering.  The new rules require the buyer to qualify at the Bank of Canada’s 5 year benchmark rate OR their contract mortgage rate plus 2 percentage points.

Buy now, don’t delay

Give us a ring, we are here to help, Starbucks latte included.