More changes to Mortgage Rules
The following are the regulatory changes announced by the Office of Superintendent of Financial Institutions (OSFI) on October 17, 2017.
- OSFI has implemented 3 new mortgage rule changes starting January 1, 2018.
Change 1: Qualifying Rate Stress Test To All Non Insured Mortgages
Non insured mortgage consumers (buyers with a 20% or greater down payment) must now qualify using a new minimum qualifying rate. The minimum rate will be the greater of the five-year benchmark rate published by the Bank of Canada OR the lender contractual mortgage rate + 2.0%.
Stress Test Summary
Uninsured Mortgages: Homebuyers/owners qualify for a mortgage using the benchmark rate, which is the Bank of Canada rate (currently 4.89%) OR the lender rate + 2%, whichever is greater.
Insured Mortgages: You must qualify for a mortgage at the Bank of Canada rate (currently 4.89%).
Do I still have the option to refinance my home?
Yes, homebuyers will still have the ability to refinance up to 80% of the value of their property. You will have to pass the same stress test which is the higher of the Bank of Canada rate (currently 4.89%) OR the rate from the lender plus 2%.
Change 2: Lenders will be required to enhance their loan to value (LTV) measurement and limits to ensure risk responsiveness
Mortgage lenders (excluding credit unions and private lenders) must establish and adhere to appropriate LTV ratio limits that are reflective of risk and updated as housing markets and the economic environment evolve.
Change 3: Restrictions will be placed on certain lending arrangements that are designed, or appear designed to avoid LTV limits
Mortgage lenders (excluding credit unions and private lenders) are prohibited from arranging with another lender: a mortgage, or a combination of a mortgage and other lending products, in any form that circumvents the institution’s maximum LTV ratio or other limits in its residential mortgage underwriting policy, or any requirements established by law.
How Can Client First Mortgage Solutions Help You?
Due to all of the recent changes to Mortgage Rules, it is important to talk with a Mortgage Advisor to see what current options are available to you. Steve and Nathan have the first hand information to help you make an informed decision regarding your current or future mortgage. They are constantly being updated on the changes, so contact them with any of your questions or concerns. Our commitment is to help you. With a combined mortgage industry knowledge of over 18 years you should contact Client First Mortgage Solutions in Maple Ridge today!
Original Article – Dominion Lending Centres – October 18, 2017