What Is The New Mortgage Stress Test?

As you may well know, the Canadian government has recently made some changes to how Canadians qualify for insured mortgages. They have instituted what is being called a “stress test” for your mortgage. Here is a good explainer video that does an excellent job of summarizing these changes, and how they impact you directly if you are looking to qualify for a mortgage.

New rules aimed at making it harder to get a mortgage took effect in October 2016, a move that is bound to have an impact on demand for homes in Canada. Ottawa announced the moves, which boil down to a stress test for all insured mortgage applications.

What does this mean for your New Mortgage?

It consists of testing to determine if a borrower could afford to pay back a loan if the rate higher, so they judge the borrower against the five-year standard rate of 4.64 per cent for a five-year loan — even though many lenders are currently offering mortgages at far less than that.

Previously, that new mortgage test was only used on certain segments of the market. But starting now, it will be in place for any insured new mortgage for a buyer putting down less than 20 per cent of the home up front.

The new mortgage rules are an attempt to rein in debt loads, which is likely to cool prices, too. By making it harder to get a mortgage, demand for housing becomes limited, which should cause prices to drop or at least not increase as quickly.

If you have any questions about the new qualifications, the stress test, or how it impacts you, please don’t hesitate to contact me anytime. Lets face it, buying a home is a stressful endeavor to begin with! I am here to help, advice and make the process less stressful!  

If you would like to know more about what i can do for and your new mortgage, please don’t hesitate to contact me anytime! I am your Trusted Regina Mortgage Broker!