The Federal Government has announced yet another important mortgage rule change in efforts to cool the housing market by implementing what they call a “stress test”.
In other words qualifying for a mortgage just got a whole lot more difficult.
Effective October 17th all insured mortgages are required to QUALIFY for their mortgage using the current Bank Of Canada Benchmark rate of 4.64% compared to using the ACTUAL rate that currently ranges from 2.39% – 2.44%.
Anyone that is currently in the market to purchase a home or refinance a mortgage but have not yet made an offer or committed a live mortgage needs to RE-QUALIFY immediately.
UNDERSTANDING THE NUMBERS
Let’s put this new rule into perspective……
A couple with a $100,000 income, no debts and 5% down payment can currently qualify for about a $484,000 home purchase using the current 5 year fixed rate of 2.44%
That same couple having to qualify at the bench mark rate of 4.64% now qualifies for a $421,456 home.
That is $62,544 less buying power!
All in effect by Oct 17th.