Mortgage Stress Test Rate Increase Canada



https://www.therobcampbell.com/
Premiere Mortgage Centre Lic 10317

*************************************************
PLEASE consider Subscribing to my channel, and giving us a Thumbs Up for this video.
*************************************************

The Superintendent of Financial Institutions (OSFI) opened up the debate again regarding the MQR (Mortgage Qualifying Rate). This had started early 2020 but quickly stopped when a pesky pandemic happened. This is the Stress Test Rate your buyers will need to qualify for if they require financing for their purchase.

Here’s what OSFI declared today:

“The new proposal for the qualifying rate for uninsured mortgages is the higher of the mortgage contract rate plus 2% or 5.25% as a minimum floor.”

So what does this mean?

Here are some FAQs to help you and your buyers/sellers:

What is an Uninsured Mortgage?

An Uninsured Mortgage is one that does not qualify for Default Insurance. It is either:
1. A purchase of a Property priced at over $1M dollars (regardless of mortgage amount)
2. A Rental Purchase
3. A mortgage that is above a 25 year Amortization (301-360 Months)
4. A mortgage where a Borrower cannot meet the other guidelines of the Insurers (CMHC, Sagen, CG)
5. A mortgage for a Refinance, regardless of the Home Value
6. Any combination of the above

What the heck does “higher of the mortgage contract rate plus 2% or 5.25%” even mean?!

If you meet any of the criteria above, then you will have to qualify at a certain rate. If the mortgage rate you are getting is 2.50%, then that plus 2% only equals 4.50%. Thus needing to qualify at the higher rate of 5.25%. If your mortgage rate ends up being 4.25%, well you will have to qualify at 6.25%. Savvy?

What is the CURRENT guideline?

Higher of the mortgage contract rate plus 2% or 4.79%

If I currently own and want to move, will this effect porting my current mortgage?

Probably not, if the dollar amount stays the same. But very rarely does someone port dollar for dollar, year for year. Also remember, if your current mortgage was CMHC insured (less than 20% down payment) but you’re moving to a higher price tag above $1M or any of the other criteria above, you’ll likely have to qualify at the new benchmark rate.

When will this take effect?

OSFI will communicate final amendments to the qualifying rate for uninsured mortgages in Guideline B-20 by May 24, 2021, with a coming into force date of June 1, 2021.

Will there be changes made to Insured Mortgages? (less than 20% down payment)

Yes, it was mentioned in a news briefing today that the Department Of Finance will make an announcement about this soon. Very soon in fact. Our Team will keep you posted on this when it breaks.

Any feedback from Banks or Lenders yet?
Nope. Yada. Not yet as of April 21st 2021.

PLEASE consider Subscribing to my channel, and giving us a Thumbs Up for this video.

You May Also Like