MAJOR ANNOUNCEMENT FROM THE MINISTER OF FINANCE IN REGARDS TO HOUSING IN CANADA. THIS MEANS MAJOR CHANGES ON QUALIFYING FOR A MORTGAGE AND HOW MUCH YOU WILL QUALIFY FOR.
From Geoff Rathgaber @ RBC:
Good morning everyone.
There was a major announcement this morning from the Finance Minister in regards to housing in Canada.
There was very little color around the announcement but I wanted to communicate the most important notes as I see them coming out. There will be more detailed information and policy to follow but I wanted to be sure to get you information as fast as possible.
As of Oct 17, 2016, all mortgages looking for approval both in a default insured form or conventional are required to qualify at the “qualifying rate” and not the discounted 5 yr. rate. This means that if a client’s debt ratios qualified for a new mortgage using the 5 yr. fixed rate of 2.49% they will now have to qualify at a rate of 4.64%! This will force clients to purchase a lower priced property than they would normally have looked at to remain under the debt ratios.
For all your clients looking to purchase they need to get moving now. If they have a live deal prior to the 17th then they can get in under the current rules.
The objective of this change is to ensure Canadians are not over reaching on home ownership and try to cool down the hot markets. I have my own opinion on this and it is that they drastically missed the point once again!!
Thanks and please call or email with any questions.