Well something is a brewing and it is supposed to be put into effect as of October 17th. This is a pretty deep topic so if anyone would like me to explain it to them in more detail, please give me a call anytime - 905-757-9519.

The government has decided to change the way that people will be approved for their mortgage financing, in a big way. Generally, anyone who was looking for a mortage with a 5% downpayment and a 5 year fixed term interest rate, had to qualify against the average rate in the market place, which today sits at 2.45%. Anyone who was looking for a term that was less than 5 years with a variable interest rate, was required to qualify against the Bank Of Canada benchmark rate of 4.64%. This was to ensure that if the interest rates were to rise, those people with variable rate terms would be able to afford the mortgage payments. This is called the stress test.

It has now been publicized that the stress test is going to be expanded to all people that are looking to buy a home with less than a 20% downpayment, regardless if they are looking for a 5 year fixed term rate. All buyers will now have to have their "debt to service ratios" calculated against the Bank of Canada's 5 year fixed rate, which as of September 28th was 4.64%. By the way, this Bank of Canada's rate is an average of the posted rates for the big six banks in Canada.  

If you are out there right now with a recently approved financing contract for a house you have just bought, you will be fine. On the other hand, if you are currently shopping for a home and have already had your pre approval numbers given to you...after October 17th those numbers will not be the same. I absolutely hate being the one to bring bad news, but everyone needs to know. By all means if you have any questions, again please never hesitate to give me a call. 905-757-9519. Check out the Globe and Mail website to read the articel that was updated this morning.

THE GLOBE AND MAIL ARTICLE