New Federal Mortgage Rules

admin | Oct. 21, 2016

New federal mortgage rules are now in effect

The federal government introduced new mortgage rules on October 17, 2016 that will impact many home buyers.

The rules involve a stress test for all insured mortgage applications to evaluate whether a borrower can still make their loan payments if interest rates rise or their financial situation changes.

The requirement was already in place for some types of mortgages, but it will now apply to all insured mortgages with down payments less than 20 percent of the purchase price.

The government is hoping these new rules will help stabilize the country’s housing markets, particularly in cities like Toronto and Vancouver where housing prices have climbed to all-time highs.

The Kitchener-Waterloo market had already been experiencing a surge in real estate activity this past summer as many Toronto buyers headed down the 401 to realize their dream of home ownership… but at a more affordable price.

Interestingly, while the government is hoping to cool down the housing market in larger cities like Toronto, it may have the reverse effect in Kitchener-Waterloo as Toronto buyers continue to stream into this area where their dollars still go further.

First-time buyers will likely be the most affected by these new mortgage rules as they may have to sit on the sidelines before they can qualify for a new mortgage, or rethink how much they can afford to spend on a home.

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