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
5 year fixed term
3.09% interest rate
25 year amortization
Today, and up to Dec 31, 2017
Jan 1, 2018
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.