New Mortgage Rules for January 2018
Are you a Canadian homeowner? A first time home buyer? Do you see yourself purchasing a home for your family in the near, foreseeable future? If you’ve answered “yes” to any of these questions, or have considered tapping into the real estate market in the New Year, we advise you to keep reading as the time has come, once again, for the Canadian mortgage rules to change. Effective January 1st of next year, the Office of the Superintendent of Financial Institutions (OSFI) will be implementing new mortgage regulations that will ultimately reduce purchasing power on conventional purchases and refinancing of all homes. Of course, as word of these new regulations surface, so do the several pressing questions from anxious homeowners, and expected home-owners-to-be, on how these changes will affect them, and what we’ll all need to know as we enter into the New Year.
Essentially, the new qualifying mortgage rules will require home buyers to qualify at a rate that is 2% higher than that of their negotiated or contract rate – ensuring that the majority of home owners pay a minimum of 20% on a down payment, in addition to having the sustainable ability to afford ongoing payments. The bulk of these measures are to confirm that banks are “lending money to home buyers who can manage their loans even if interest rates rise … [thus] reducing the banks’ reliance on loan-to-value calculations in markets where home prices are rising quite rapidly”. According to Jeremy Rudin, Superintendent of Financial Institutions, the risks that coincide with the stress of these new regulations are clear. Yet, rather than waiting upon potential debts and defaults in an otherwise rising market, his approach is to adapt their standards to new developments.
Here’s an overview as to who might feel the greatest impact with respect to these new changes, effective January 1st, 2018:
Needless to say, there is an ample amount of new information that could be relevant to you in the New Year. Should you be considering home ownership in 2018, be sure to educate yourself on the soon-to-be regulation changes and become aware of how they will affect you.
I want to hear from you. Let’s Chat!
The trade marks displayed on this site, including CREA®, MLS®, Multiple Listing Service®, and the associated logos and design marks are owned by the Canadian Real Estate Association. REALTOR® is a trade mark of REALTOR® Canada Inc., a corporation owned by Canadian Real Estate Association and the National Association of REALTORS®. Other trade marks may be owned by real estate boards and other third parties. Nothing contained on this site gives any user the right or license to use any trade mark displayed on this site without the express permission of the owner.
powered by WEBKITS
This article was first published on https://www.teamrealty.ca.