The new stress-test rules come into effect for borrowers today – Monday, October 17th.
What does this mean to you? If you have less-than-20% down payment you’re going to have to qualify for a mortgage at a much higher criteria. As of today, you must qualify at the benchmark rate of 4.74% interest rather than a 5 year fixed rate at 2.39%. On average that’s about 20-25% less in borrowing ability than before.
This is just one of many changes the government is making. Why is the government making these changes?
- –To keep Canadians out of debt
- –To protect the government's interest
- –To crack down on foreign real-estate speculation by closing a tax loophole that some foreign buyers have used to claim exemptions in capital-gains tax for selling properties that they falsely claim as their primary residences.
This Globe and Mail article does a great job of summarizing the changes that the government is making and what they will mean to the real estate market:
Our mortgage broker, Jake, also weighs in with his thoughts on what the changes will bring: