New Mortgage Rules - June 2021

As of June 1st, the Bank of Canada changed the stress test rules. With this change, now both insured and uninsured mortgage borrowers will be subject to a stricter stress test when qualifying for their mortgage.

Even if your down payment is 20% or more, the qualifying rate is now the contracted rate plus two percentage points or 5.25%, whichever is higher.

This means that any with an uninsured mortgage must show they can afford the mortgage payments if the interest rate was two percentage points higher than what the bank is offering, or the new five-year benchmark rate per the Bank of Canada.

This tougher stress test reduces buying power by roughly 4-5% for borrowers.

Consider the following, (assuming good credit and max GDS/TDS) if you gross income is $100,000, with the previous stress test at 4.79%, 

you would be able to borrow  $469,530, with the current qualifying rate, you can now only borrow $448,880.  

Your home buying options have been reduced by $20,650.

To ensure that you are budgeting accordingly and searching in the right price range, please make sure to contact a mortgage professional before beginning your home search.  

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You can download my mortgage app CLICK HERE to help with rough calculations and ballparks.

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