October 17, 2016 is a critical date – changes to mortgage insurance rules were announced by the federal government and will take effect that day. Do you understand the changes and how they will impact your clients and the real estate industry?
Mortgage insurance rules will change to require all insured mortgages to undergo a ‘stress test’ from the lender. That test will require the buyer to qualify for a mortgage at the Bank of Canada posted rate, currently 4.64%, even though they would still receive the contract rate.
The buying power of the client will be lowered by the need to qualify at the higher rate.
Example (as provided by a mortgage professional)
Family A is qualifying for a mortgage using the following information:
|Current Annual Family Income||$87,000|
|Household Debt Payments||$700 per month|
|Property Tax Payments||$3,000 per month|
- Qualifying for a mortgage today, Family A qualifies for a purchase price of $450,000.
Qualifying for a mortgage after October 17, 2016, given the need to qualify at the Bank of Canada rate of 4.64%, Family A qualifies for a purchase price of $360,000
If you are considering buying that dream home you may be forced to do it fast before the October 17, guidelines come into effect. Contact your mortgage professional and contact one of our Team real estate professionals at 780-456-6300 to put in an offer on that dream home before it slips away.