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The New Mortgage Rules: What do they actually mean?

October 31, 2016 in Uncategorized

The federal government recently implemented new mortgage rules to reduce the risk of potential buyers losing their homes if there’s a shift in the economy or rise in interest rates.

The new rules are directed at anyone with less than a 20% down payment, where their mortgage is called high ratio, and must be insured versus conventional financing. Leading up to the October 17th deadline, we saw a flurry of activity from mostly first time buyers, as they scrambled to get into the market before the new rules took effect. Here’s a summary of the new rules and how they affect a buyer and the market, courtesy of my in-office Dominion Lending Centres representative.
How does this affect a home buyer with less than 20% down payment? 
 
The biggest effect will be on the amount that the home buyer will be able to qualify for. Previously, qualification was based on the individual lender’s rate, but now the buyer must qualify at the Bank of Canada (BOC) rate. For example, the buyer was previously qualified on the banking institution’s posted five year fixed rate of let’s say 2.4%. Now they must go through what they’re calling a “stress test”, which means they qualify for the mortgage at the BOC’s posted rate, which is currently 4.46%, even though the mortgage will actually be at the lower rate.
How does this affect a home buyer for purchase price of a home?
 
Before October 17th, if buyers with a combined annual income of $100,000 had the minimum down payment of 5%, they would have qualified for a home purchase of approximately $560,000. With the new rules, they now only qualify for a purchase price of $445,000.
 
Do these rules affect home buyers with a down payment of 20% or more?
 
Not at this time. However, National Bank is now using the BOC stress test for all buyers, regardless of how much they have as a down payment. There are fears the other major lending institutions will follow.
My mortgage is coming up for renewal. Will I still be able to refinance my home?
 
Yes! You will still be able to refinance your home up to 80% of the value of your property. Specifics may differ from lender to lender.
Will these new rules lead to a decline in home sales?
 
It’s still a bit early to determine. However, these rules are aimed at the entry level buyer and the high sales we’ve seen in this segment have helped fuel the middle and upper end of the real estate market.
If you have any further questions about these new mortgage rules, or the real estate market in general, please call or email me.
Des

City cabinet recommends legislature supplement 3 new wards

October 27, 2016 in Beach Metro Community News

Ward 32 City Councillor Mary-Margaret McMahon speaks during a Executive Committee assembly on Oct 26, 2016

It was a tighten one, though Beach residents penetrating to keep their neighbourhood’s boundaries

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Fire on Neville Park Boulevard and Balmy Beach Park Trail

October 25, 2016 in Beach Metro Community News

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Toronto Police is on a stage after a glow pennyless out during a residence nearby Neville Park Boulevard and Balmy Beach Park Trail.

Reports contend fume and abandon were coming

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Zombies are entrance to a Beach

October 24, 2016 in Beach Metro Community News

1st annual Beach zombie travel 2016

Get prepared Beachers – a zombies are entrance and on Oct 29, they’ll be holding over a community.

Courcelette students Cooper and Kate Custance, and

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The Main Menu: Make your possess Indian food

October 23, 2016 in Beach Metro Community News

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Prepare your possess Indian take out with these blending recipes from Foodland Ontario. If we are new to Indian food and endangered about a “heat” level, be positive that

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A opposite kind of unit sport in a Beach

October 23, 2016 in Beach Metro Community News

Kew Park Mansions on Queen Street East in 1995.

We’ve recently been celebrating a 100th anniversary of a Beaches Public Library with talks and tours of a ancestral building and

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Open Doors: Waverly Road Baptist Church celebrates 125 years in a Beach

October 22, 2016 in Beach Metro Community News

Waverly Road Baptist Church

In 1891, a grocer on Queen Street named Philip Whitlock started a Sunday School for children in a behind of his store, in what is now

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Fall for these tumble cleaning tips

October 22, 2016 in Beach Metro Community News

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The attainment of cold nights and transparent frail days means tumble is finally here – and with it a sign that soon, many of the time will be spent

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Hair Dynamix hosting fundraiser for internal teen fighting cancer

October 22, 2016 in Beach Metro Community News

Hair Dynamix will be hosting a fundraising eventuality on Oct 24 to lift income for a family of 14-year aged Jordan Gavadza.

Jordan, a Lacrosse player, is now fighting T Cell Lymphoblastic Lymphoma and has already left by 29 days

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Bottoms Up: How to sequence booze in a restaurant

October 21, 2016 in Beach Metro Community News

One of a many intimidating aspects about booze is grouping it in a restaurant. This, by far, creates a many stress among diners. Here are some useful tips to make grouping booze easier and reduction stressful.

First and foremost,

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