A New Home for the Holidays
Homebuyers - Rushing to get into Market
Canadians are in a rush. An
economics strategist, Benjamin Reitzes, at the Bank of Montreal has stated that
there is an upward trend in household debt. It may be because homeowners are aware
of a change coming. Rietzes believes what is pushing the debt trend is
homebuyers rushing to get into the market ahead of the new OSFI rule.
New Rule for Home Buyers Comes into Effect in January of 2018
The Office of the Superintendent
of Financial Institutions (OSFI) has established a new minimum qualifying rate,
or "stress test," for borrowers making a down payment of more than
20% of the home's value. Previously, stress test requirements only applied to
insured mortgages (those with down payments of less than 20%) and most variable
mortgages and terms less than five years.
Stress Test Rule for a Prudent Regime
The stress test requirement means
that buyers with uninsured mortgages need to prove that they can afford
payments based on the greater of the Bank of Canada's five-year benchmark rate
(currently 4.89%) or their contract mortgage rate plus two percentage points.
According to Superintendent, Jeremy Rudin this will reinforce a strong and
prudent regulatory regime for residential mortgage underwriting in
Canada."
Time to Buy a Home?
From most perspectives, a home is
one of the best purchases worth going into debt for. Do you have questions? Do
you need help to figure out what to do next? Give Chris a call 403-680-4479
