Mortgage rules changing

Mortgage rules changing

Earlier in 2017 the government changed the mortgage rules to put everyone at a 4.84% mortgage rate for the approval process (even if actual rate being provided by the lender was lower). This was done so individuals wouldn’t take on too much mortgage debt, as they would be approved for a lower loan amount because of the increased interest rate.


New rule and date

The new rule applies directly to individuals who want to put down 20% or more on their purchase. Whenever 20%+ is put down the mortgage is uninsured (saving Canadians on the amount of the mortgage payment). The government is proposing to replace the current rule by allowing individuals to qualify for lending at 200 basis points above the actual rate.  The change will take effect on January 1, 2018. To explain the change, say a lender offers me a mortgage at interest rate of 3%, I would need to qualify at 5% to be approved for that mortgage.


How does it affect Canadians

At the end of the day, it will make housing less affordable to Canadians, as higher income levels will be required to be approved for a loan. In general, since current rates are low, this might not have a dramatic impact, but as interest rates rise it will affect more Canadians.


Read further details here.

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