Thursday, January 4, 2018 / by Richard Kinnell
Mortgage Rule Changes
New Changes Coming - The Stress Test
In 2016 the Government introduced new mortgage rules for insured mortgages, or high ratio mortgages (those with less than 20% down). Buyers have to qualify at the set "Benchmark Rate", regardless of what their actual interest rate was going to be on the mortgage.
This effectively reduced buyers purchasing power by a whopping 20%!! Buyers who may have been approved for financing on a $400,000 purchase, were now only able to shop for houses up to $320,000 - a reduction of $80,000! This had a drastic effect on many buyers. Those who were looking at the $400,000 price point may have been considering small detached or semi-detached homes as their first purchase, and were now forced into shopping for apartment style condominiums, because that is all their budget would allow for in this city.
Change Is Good, Sometimes...
Now I am not saying that I agree or disagree with the new rules coming - really, the Government doesn't care what I think! But ; ...
In 2016 the Government introduced new mortgage rules for insured mortgages, or high ratio mortgages (those with less than 20% down). Buyers have to qualify at the set "Benchmark Rate", regardless of what their actual interest rate was going to be on the mortgage.
This effectively reduced buyers purchasing power by a whopping 20%!! Buyers who may have been approved for financing on a $400,000 purchase, were now only able to shop for houses up to $320,000 - a reduction of $80,000! This had a drastic effect on many buyers. Those who were looking at the $400,000 price point may have been considering small detached or semi-detached homes as their first purchase, and were now forced into shopping for apartment style condominiums, because that is all their budget would allow for in this city.
Change Is Good, Sometimes...
Now I am not saying that I agree or disagree with the new rules coming - really, the Government doesn't care what I think! But ; ...
