SPECIAL RATE OFFER
2.59% for 5 year fixed rate. 2% for 5 year variable rate.*
The Government of Canada’s New Mortgage Rules have made mortgages more difficult post October 17th. I've broken down the new changes, answering the most asked questions, What-Who-Why and How I can help.
Why is the Department of Finance implementing these new changes?
These new regulations are aimed at protecting the financial security of Canadians and supporting the long term stability of the housing market in Canada.
What are the changes?
There is a new “stress test” to discover if you can afford to repay their loan if the established rate was higher than what you currently pay (i.e. you can still afford the house at renewal if mortgage rates rise to the Bank of Canada’s five-year fixed mortgage rate). The new rules perform the test for all homeowners, even though in past years the test was only applied to particular segments of the housing market. Today, a buyer who puts down less than 20% of the home, which is an insured mortgage, will be stress tested under this rule at the Federal Government “five-year standard rate” of 4.64% on a five-year loan. Under the new Department of Finance regulations, all insured mortgages, regardless of term (fixed or variable) will now have to qualify on the Bank of Canada Benchmark rate of 4.64% and 25 year amortization maximum.
How does this affect your home buyers with less than 20% down payment/High Ratio Purchases?
The biggest effect will be on the amount that the home buyer will be able to qualify to purchase. Previously, for example, a five year fixed mortgage at 2.59% rate, was qualified at a 2.59% rate, under the new rules a five year fixed rate mortgage at 2.59% must be “stress tested” by qualifying at the Bank of Canada's posted rate (Currently 4.64%) The net result is an approximate 20% reduction in the amount of mortgage money available.
How does this affect your home buyer with a down payment of 20% or more?
There is no significant impact anticipated for home buyers placing 20% or more down. Mortgage Architects has many different options and there are still a variety of solutions for the majority of home buyers.
What does this mean for rates in the future?
There is a likelihood that rates will start to increase as the competition decreases for certain banks. The additional risk being passed to lenders, will be passed on to the consumer as additional risk means higher rates. These banks will have the liberty of deciding what to raise the rates to, without the competition of other lenders that are required to stress test borrowers.
What is the best rate out there currently?
A rate special that we have at Bennett Capital is 2.59%, for a 5 year fixed, and 2% for a 5 year variable. Save you interest and call today! Any other specific questions, call or email me anytime: firstname.lastname@example.org 519-576-4869
*On approved credit - some conditions apply