Hi everyone, and welcome back to the Mortgage Studio Blog. I’m Michele Ellis, Senior Mortgage Broker at the Mortgage Studio, and I want to jump right into things today by discussing the new federal mortgage underwriting guidelines put in place by OSFI, the Office of the Superintendent of Financial Institutions Canada.
The new regulations, which come into effect on January 1st, 2018, establish a new minimum qualifying rate for uninsured mortgages. Generally known as a “stress test,” these minimum qualifying rates mean that buyers “will need to prove that they can afford payments based on the greater of the Bank of Canada’s five-year benchmark rate (currently 4.89%) or their contract mortgage rate plus two percentage points” (via Canadian Mortgage Trends, emphasis theirs). In simplest terms, this means that a buyer looking for a mortgage in the new year will be able to afford much less than they would be today.
Here’s a handy chart courtesy CanadaMortgageNews.ca that illustrates the change:
As you can see, the difference is quite drastic, and many industry insiders think that the regulations go too far. As a professional mortgage broker, my only job to help Canadians get the most of their mortgage, and I’ve done that through many years of shifting economies and regulations just like this. This upcoming change is particularly significant, and I strongly urge anyone who might be affected by it to contact me so I can talk you through your options. This includes, but isn’t limited to:
- Anyone looking or thinking of looking for a new mortgage.
- Anyone who has a mortgage up for renewal.
- Anyone thinking of refinancing their mortgage in the future.
Crucially, anyone looking for a mortgage in the near future should strongly consider getting one sooner rather than later. The new OSFI regulations kick in on January 1st, so anyone who acts before then won’t be subject to the new stress test guidelines. If you think you fit that bill, or simply want to learn more about how the new rules will affect your mortgage, my number is 604.892.4647 and I’m happy to answer any questions you might have.
The next two months will be a critical time for Canadians looking to get their perfect mortgage. If you’re one of them, I hope to hear from you soon.
Michele Ellis – Senior Mortgage Broker, The Mortgage Studio