23/05/2021
A Major Mortgage Rule change is coming into effect June 1st regarding qualifying for a mortgage whether you are buying or refinancing. Canada’s banking watchdog is confirming it will apply tighter rules to the so-called mortgage stress test, effective June 01.
This changes the qualifying rate by .46% making it harder to qualify for a mortgage. If you have a purchase agreement or refinance approval in place before June 1st you are ok.
This can be offset by using the new government down payment incentive but that means the government will own a part of your home equity!
In a release Thursday, the Office of the Superintendent of Financial Institutions said the new qualifying rate for an uninsured mortgage – where borrowers have at least a 20% down payment – will rise to either the mortgage contract rate plus 200 basis points or 5.25%, whichever is higher.
The confirmation comes after OSFI reviewed submissions on the plan to raise the bar on the stress test, which it first proposed in April.
Currently, the stress test is set at the mortgage rate plus 200 basis points – or two percentage points – or the Bank of Canada’s five-year rate, which currently sits at 4.79%, whichever is higher."
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Mortgage Architects is a Canadian Mortgage Brokerage supported by a network of experienced and caring Mortgage Brokers who have access to more than 50 lending institutions. Our head office is located in Mississauga and we have regional offices in Vancouver, Calgary, Laval and Halifax.
