Rule Changes from the Office of the Superintendent of Financial Institutions effective January 1st, 2018.
As of January 1st 2018, new mortgage regulations come into effect that will reduce purchasing power on conventional purchases (with 20% or more down payment) and refinancing of all homes.
Effective January 1st, all conventional mortgages will have to qualify at the greater of: a rate 2% higher than the actual contract rate, or the Qualifying Rate (4.99% at the time of writing). High Ratio mortgages (with down payments less than 20%) were subject to a similar change as of October 17th 2016. The new rules will impact mortgage affordability by approximately 20%. As an example, an average family income of $100,000 translates into approximately a $500,000 mortgage at the current rates. With the new rules, the ability to qualify for a mortgage will be reduced to approximately $400,000. For the purposes of this example, our mortgage calculations are based on a 30 year amortized mortgage and no other outstanding debts ( OAC, rates subject to change)
If you are considering purchasing a home with 20% down payment, start looking more seriously and purchase prior to January 1st 2018. Purchase agreement must be in place prior to January 1st 2018 to qualify under the existing rules.
People looking to refinance their existing home for debt consolidation, home renovations, purchasing a cottage, or other major financial goals, should strongly consider refinancing prior to the qualifying rule changes on January 1st.
Contact Dave Mcallister if you have any further questions!