Justin MacKinnon

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The new guidline for uninsured mortgages come 2018 will have you stress tested for an additional 2%.  So, if you have 100,000$ down for a 500,000$ dollar home and you found a great rate at 2.90%, you will be tested for 4.90% for that 5-year mortgage.  Prepare yourselves for a tighter lending encironment.  Private lenders may see a rise in business as regulated financial institutions are adopting more strict lending procedures.  

 

Those that already own may not be safe either, come renewel time.  Almost all of the leverage falls into your existing lenders hands, and they’ll know you can’t leave. This could result in less mortgage competition, and higher borrowing rates than if you could just go to a competitor and get a better rate.  If you can't afford a new stress test, you'll end up paying more than those who can.

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On Tuesday morning, Canada's banking regulator (OSFI) published the final changes to its guidelines for residential mortgage underwriting, including a financial stress test for buyers who don't need mortgage insurance.



The Office of the Superintendent of Financial Institutions (OSFI) said Tuesday the changes will come into force by Jan. 1, 2018.

 


The main change is that homebuyers who don't require mortgage insurance because they have a down payment of 20% or more will have to prove they can continue to make payments if interest rates rise.

Other changes include restrictions on co-lending, or bundled mortgages, aimed at ensuring financial institutions do not circumvent rules that limit how much they can lend.



Further details to follow. 


https://beta.theglobeandmail.com/real-estate/the-market/canadas-banking-regulator-raises-bar-for-uninsured-mortgages/article36611747/?ref=http://www.theglobeandmail.com&

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