Thinking about getting a Mortgage? You need to see this.
The Finance Minister Chrystia Freeland has announced that effective June 1, 2021 - the qualifying rate for Canadians buyers with a downpayment smaller than 20% will raise. The current qualifying rate of 4.79% will raise to 5.25%.
What does this even mean?
Currently, the stress test is set at the mortgage rate plus 2 percentage points, 200 points, or the Bank Of Canada’s five year rate (which currently sits at 4.79%) - whichever is higher. This stress test will impact the buying power of those looking to enter the real estate market after June 1, 2021. While it may decrease the amount of money available to buyers, it is for the protection of the buyers and their lending institutions.
Why did this happen?
The Assistant Superintendent of Regulation said the decision to impose a higher stress test rate will help reduce the financial risk stemming from the housing sector, stating “in a complicated and sometimes volatile housing market, the need for sound mortgage underwriting cannot be underestimated”. The goal is to support financial resistance should economic circumstances change, which will maintain the integrity of Canadas financial system.
While this will affect all buyers, buying a home is still very possible!
If you have more questions about mortgages, or need a trusted real estate agent who knows the tricks to avoid over-spending, please reach out to me!
Bridget Sullivan
(613) 285-4737
bridget@bridgetsullivan.ca
