Reviewing Mortgage Regulations
Reviewing Mortgage Regulations
You may have heard that new mortgage regulations are coming to effect, and are probably asking how this might impact you as a buyer, seller, owner, or any combination of these. Well, here’s a little summary to help clear things up for you.
Currently, the best five-year fixed interest rate a qualified borrower would be approved for is 2.39% – but once the changes go into effect, this same buyer would have to qualify at 4.64%.
Furthermore, under the current rules this same qualified buyer, earning $80,000/year and with 5% down, could qualify for up to a $475,000 mortgage. Once the new regulations are in place, this same buyer could only qualify for up to $375,000. Those who have been approved before October 3rd of this year will fortunately be unaffected, as will those who have technically purchased or sold a property before October 17th.
These new measures are coming into effect as a ‘stress test’ according to Evan Sidall, CEO of Canada’s housing agency, the CMHC, in order to ‘help offset the highly stimulative effect of low interest rates’. Mr. Sidall was also quoted stating that the CMHC hopes the new mortgage rules will help support the economy.
For a more detailed summary of state of the housing market and the impact the new amortization restrictions will have, click the following links to the Globe and Mail and KelownaNow articles, or give me a call to discuss it personally.
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