The New Mortgage Stress Test!

Well folks, as though the world were not filled with enough surprises as it is, the rules around mortgage approval and rates have been flipped on their head in the last few days. Effectively, the government has doubled mortgage interest rates over night, without actually changing the actual interest rates.

There is tons of controversy about this, however, I for one, am semi-pleased to see our government taking preliminary precautions to avoid our own "bubble-burst"/ economic disaster as was witnessed in the US a few years back.

Do I think that it was sudden and unannounced? Yes, absolutely.

Do I think the rate at which buyers now have to qualify above and beyond the actual rates they will pay is excessive? Yes, they are somewhat high.

Before you jump down my throat about my agreement with the action, take into consideration that though this delays a lot of people's buying sprees into the real estate world, it also provides security for those who are in and for those who are soon to be in this arena. This measure helps to ensure that if the rates were to go up, that the markets across the country would not tank due to hundreds of people suddenly being in a state of foreclosure because they could no longer afford their mortgages. The long term picture and goal is stability for everyone. YES, I agree that it is a huge bump in the road for younger generations that are squeezing their dollars to get into a home, but if they have to squeeze THAT hard in the first place, it causes me to question whether it is truly the right time for them to get into their own home. Being house poor is not a great place to be for anyone and balancing on that border is a dangerous act, thus, perhaps a bit more stability (i.e. money) is just what is in order before someone jumps in to taking on the responsibilities of being a home owner.

For more clarity on the recent changes, you can check out the details here under the "Applying the Mortgage Stress Test" section of the article:

http://www.fin.gc.ca/n16/data/16-117_2-eng.asp

If you have more questions, concerns or comments, please write to me or give me a call today at 250.808.3638.

Real Know How. Real Estate.

Truly,

Justina

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Justina LeeStolz

Justina LeeStolz

Personal Real Estate Corporation
CENTURY 21 Assurance Realty Ltd.
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