mail@teambiberger.com
250-746-6621
A Reputation Built on Trust & Results -
Elizabeth Biberger: Real Estate in Duncan & Cowichan

Blog

New Mortgage Rules

Posted by on

Check in with your Mortgage Provider!

As many of you are aware, the government initiated stronger mortgage qualification rules earlier this month.  While many of the details are coming in to us in dribs and drabs, the one part that does seem clear is financing is getting tougher as of October 17th.

The new rules state all buyers securing a high-ratio mortgage (less than 20% down) must qualify at the five year benchmark rate, even if they have negotiated a lower five year term with their lender.  In other words, if you negotiate a rate of 2.5% on a five year term, you must qualify at the higher benchmark rate (currently 4.64%).  Your payments would be at the 2.5% but you must qualify as if they were at 4.64%. 

The idea of these changes is to protect buyers from extending too far on the initial mortgage amount and not being able to meet commitments of the mortgage should interest rates start to rise. 

While this is a policy that will certainly protect many buyers from future financial troubles, it is not going to be without impact on current housing markets. How those impacts play out, only time will tell.  BCREA Economists have offered their opinions in the following bulletin.

http://www.bcrea.bc.ca/docs/economics-forecasts-and-presentations/millennials-bear-the-brunt-of-fed-policy-changes.pdf

Bottom line is PLEASE contact your Mortgage Broker so you know exactly your position when looking for your new home.