New Mortgage Rules
Taking Effect October 17th!
We are sure that many people have been reading articles and hearing chitter chatter regarding the new mortgage rules!!
Yes- the government has definitely cracked down on how people will now be qualified for their mortgages.
The demographic that could be the most greatly affected by this would be First Time Home Buyers with smaller down payments, and higher debt loads.
But Not to worry, your dreams of home ownership are not lost!
Here is a bit of clarity for those who are Looking to Purchase, Have Purchased or Are looking to Sell....
Breakdown of Rules:
Anyone on a 'Fixed Rate' 5 Year Term would be qualified using the Posted MORTGAGE Rate (2.29% approx).
Anyone using a 'Variable Rate' was ALWAYS subject to the imposed Stressed Test which had Buyers approved at higher rate (Banks Posted Rates which are presently 4.64%).
Anyone under 20% Down Payment had a MAX Amortization Period (length of loan) to 25 Years.
Anyone OVER 20% Down Payment could extend their loan to 30 Years.
A Max Total Debt Service Ratio of 44% With HOUSING Expenses NOT going over 39% Gross Debt Service.
Moving Forward here are the New Rules:
20% Down Payment Or Less (CMHC Insured Mortgage);
ALL Buyers Variable OR Fixed Rate will be subject to a 'Stress Test'. All Approvals will be BASED ON what the Buyer Qualifies for at 4.64% (Banks Current Posted Rates).
This will DECREASE Buyer's Pre-Approvals.
These rules are effective October 17th.
OVER 20% Down Payment;
Many people who have over 20% Down Payment do not know that their Mortgage is still 'insured'. We see insured mortgages at this down payment common throughout 'B Level' and 'Monoline Lenders'.
A Monoline lender is a company who JUST works with Mortgages.
CHANGES for People OVER 20% Down Payment WITH Insured Mortgages;
-subject to stress test (4.64% Bank Posted Rate) qualification
-Can Not Purchase Over $1Million - Down Payment now must be 35%
-Can Not Amortize Longer than 25 Years
IF you have a TRUE Conventional Mortgage- 20% Down Payment NOT insured - you are STILL qualified at the old rules (Bank Posted MORTGAGE Rate 2.29%)
These rules are effective November 30th.
**It is Very Important to Contact your Mortgage Broker ASAP to find out how these new rules will affect your approval**
WHY the New Mortgage Rules are a GOOD thing;
Given the increased competition and rising house prices the Government is trying to crack down on Mortgages being given out in our Country.
Many people are being given mortgages that simply put... they truly can not afford.
This FORCES the majority of buyers to be approved at a higher rate.
Although YES it will lower their Amount they can purchase up to this type of change will keep our economy and housing market STABLE which is what WE as the general public want!
Yes- This could slow down our market and increase DAYS ON MARKET for a listing. However Ultimately it will allow Buyers to do their 'proper due diligence' to ensure that they can truly afford what they are purchasing at.
We want to see a rise again in housing prices next year, so we believe that a slow down is necessary at this time.
These changes will push a lot of people to the 'Major 5 Banks' (TD, Scotia, RBC, BMO, CIBC) which will help the government regulate foreign money coming in and out of our country.
Our team works with professionals from every major bank as well as Mortgage Brokers who work with Monoline Lenders and B Level Lenders.
Have a question on how this effects you personally?
Get in touch with us! We are always just a call, text or email away. Let us shed some light on this situation and on how these changes will positively impact our housing market!
Make Your Approach~The Fresh Approach!
The Fresh Approach Real Estate Team with Keller Williams Realty Solutions,
Allana Thompson, Christy D'Oliveira, Kyrsten Feere
Allana- 416-567-2018 firstname.lastname@example.org
Christy- 647-261-8910 email@example.com
Kyrsten- 905-577-2608 firstname.lastname@example.org