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October 17th, 2016

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October 17 – New Mortgage Rules Take Effect

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:

http://www.theglobeandmail.com/news/politics/real-estate-reform-what-you-need-to-know-about-ottawasoverhaul/article32229066/

Our mortgage broker, Jake, also weighs in with his thoughts on what the changes will bring:

http://mortgagejake.com/blog/blog_details/monday_october_third_two_thousand_and_sixteen/

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