New year,
new mortgage regulations. Throughout 2017, Canada’s largest markets experienced
record-breaking activity. Tougher federal mortgage regulations took full effect
on January 1st 2018, decreasing affordability for new borrowers, and
contributing to slower selling conditions.
GuidelineB-20 is anticipated to have the most impact, as all new mortgage applicants must
undergo a stress test regardless of their down payment size. In past years,
buyers with a down payment of less than 20% were subjected to a stress test, which requires the buyer to
prove they can carry their monthly payments at either their contractual rate
PLUS 2% or at the Bank of Canada’s benchmark rate – whichever is higher. Now
ALL buyers will undergo the stress test – whether they put down 20% or not.
As Canada’s
“big six” lenders (National Bank of Canada, Royal Bank, The Bank of Montreal,
Canadian Imperial Bank of Commerce, The Bank of Nova Scotia, and Toronto Dominion
Bank) hike their five-year posted and prime rates, that criteria benchmark is
expected to get even steeper, increasing to 5.14% from 4.99% upon news of the
Bank of Canada’s January rate hike.
While it is
always our role as a real estate agent to help clients navigate the market,
solid guidance is needed more than ever this home buying season.
Find out more
by reading Penelope Graham’s article via Real Estate Magazine online.
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