rennie_landscape_Spring_2020

policy

INSURED MORTGAGE STRESS TEST CHANGE & A 2.7% PURCHASING POWER BUMP Effective April 6, 2020, the new minimum qualifying rate for insured mortgages will be the weekly median five-year fixed insured be able to qualify for a mortgage of almost $399,000 under the old rules and, with a 10% down payment, could afford a home worth approximately $443,000. The new rules 06. policy A long-awaited change to the mortgage stress test is introduced and new development cost charges have come to Metro Vancouver.

mortgage rate frommortgage insurance applications, plus 200 basis points. As such, the Bank of Canada’s benchmark rate will no longer factor into the stress test parameters governing insured mortgages. Canada’s Ministry of Finance has indicated that the new median weekly rate would currently be in the range of 4.89%, or 30 basis points below the Bank of Canada’s benchmark rate. So, rather than having to qualify for a mortgage at 5.19%, insured borrowers would have to qualify at 4.89%. In working through the mortgage calculation, a household with a $95,000 income would

would see this mortgage amount increase to $411,000 and, with the same down payment, this household could buy a home worth up to $455,000. Therefore, the overall result would be a 2.7% increase in purchasing power for this household, equivalent to the ability to borrow an additional $12,100, as a result of the modified stress test. The Office of the Superintendent of Financial Institutions is considering whether or not to apply the new stress test rules to uninsured mortgages, with a decision likely to be made in early-to mid-April 2020.

45

rennie.com

Made with FlippingBook - professional solution for displaying marketing and sales documents online