New Mortgage Stress Test Rules Coming June 1st

It’s no surprise that mortgage rates are on the rise. Rates have been at an all time low for some time now, but that has and will change again June 1st. The country’s federal banking regulator is tightening rules on mortgage stress test for homebuyers with uninsured mortgages starting June 1.

The minimum qualifying rate for uninsured mortgages – residential
mortgages with a down payment of 20 per cent or more – will rise to
either the contracted rate plus two percentage points or 5.25 per cent,
whichever is higher.

As it stands, any buyer whose down payment on
a home is one-fifth of the purchase price or more has to show they can
afford mortgage payments if the interest rate was two percentage points
higher than what the bank is offering them or the five-year benchmark
rate published by the Bank of Canada, which sits at 4.79 per cent —
whichever is higher.

So what does this mean to you? If you are looking for a property and plan to spend a good deal of time there or moving to the area, this will benefit you. There will be many who sit this season out due to speculative intention. This is a time to buy for the long term, do your homework, and make sure that the area you are purchasing in is what you want.