Edward Kowgier

Edward Kowgier

Sales Representative
CENTURY 21 Heritage Group Ltd., Brokerage*
  • 416-818-1926
  • 905-883-8300
  • 905-883-8301
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With the new year, an updated federal mortgage regulation took full effect on Jan. 1, reducing affordability for new borrowers.  These government policy changes are anticipated to be the most impactful since all new mortgage applicants must undergo a stress test regardless of their down payment size. Under the rules, all buyers applying for a mortgage must prove they can carry their monthly payments at either their contract rate plus two percent, or at the Bank of Canada’s benchmark rate – whichever is higher (now around 5.14%).

Here are some of the  impacts of this policy  changes:

Pre-approval is critical:

Obtaining a pre-approval has always been a crucial first step before starting the home hunting process but receiving one in 2018 will provide much-needed clarity on how the new mortgage rules have impacted buyers’ budgets. Also locking into a 60- or 90-day preapproval can offer some peace of mind for buyers while they search for the perfect house.

There are limited mortgage options:

The introduction of a stress test was only one portion of changes; the regulations also ban the practice of “co-lending” or “bundled” mortgages, which combine multiple mortgage loan products to help a borrower satisfy their minimum loan-to-value requirements, that limits options for borrowers who may not satisfy big banks  lending requirements, sending them  to the private loan market, where high rates and fees are to be expected.

Buyers have to downsize expectations

The impact of a new mortgage rules is that  home buyers will qualify for smaller mortgages than they would have last year. For example, they will get $120,000 less on a typical $600,000 mortgage. For most buyers, that could mean choosing a townhome rather than detached home   or one- instead of  two-bedroom condo.


May the road rise to meet you
May the wind be always at your back
May the sun shine warm upon your face
May the rains fall soft upon your fields
And, until we meet again, 
May God hold you in the hollow of His hand.

The life is great!

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