Qualifying Rates for Canadian Mortgages?

Join us for another Episode of Make Money Count, now recorded live every Sunday at 3pm EST on 1010 Newstalk.

Marcus shares his thoughts on the new qualifying stress test for Canadian mortgages, and shares his ideas on why that shouldn't be reason alone to rush into the market.

Starting June 1, Canadian home-buyers will face tougher mortgage stress test rules that will decrease the buying power of most borrowers. The move, announced by the country’s banking regulator in May, was in response to an overheated market that has already started to see signs of cooling.

Even prices in the country’s largest market have started to stall. The average selling price for the Greater Toronto Area was $1,090,992 in April, down slightly from $1,097,655 the previous month, according to the Toronto Regional Real Estate Board.

The new mortgage stress tests will affect Canadian homebuyers applying for or renewing a mortgage.

The new qualifying rate on uninsured mortgages – where the down payment is more 20 per cent or more – is now either two percentage points above the contract rate, or 5.25 per cent, whichever is higher.

Before June 1, any buyer whose down payment was 20 per cent of the purchase price or more had to show they could afford mortgage payments if the interest rate was two percentage points higher than what the bank is offering them or 4.79 per cent, whichever was higher.

 

If you're looking for a stable investment, take a look at the Cannect Mortgage Fund.

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