Eric Skicki

Canada’s Four New Housing Rules

new-mortgage-rules

As of October 17th, 2016, some Canadians may find it more difficult to obtain a mortgage in order to purchase a home. Below I will discuss the FOUR major changes within the system; who it affects and what this means for the housing market, more specifically, the Mississauga condo market.

 

Rule 1: Mortgage rate “stress test”

What is a high-ratio mortgage and who does it impact? The Canadian Government now requires those with less than 20% down payment to purchase mortgage default insurance. Therefore, anyone with less than 20% down payment is considered to have a high-ratio mortgage.

All high-ratio insured home buyers must now qualify for mortgage insurance at a rate of 4.64%. Though banks offer interest rates at 2.5%, institutions want to ensure borrowers can still make their monthly payments in the event that rates increase. This new rule came into effect on October 17th, 2016.

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