In response to increasing house prices across Canada the OSFI is proposing changes to the stress test to help control the housing market. Note that these rules will apply to uninsured mortgages.
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This change is proposed for June 2021and can make a huge difference in qualifying for your mortgage and potentially affect a sellers bottom line.
No need to stress about the stress test!
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Here is what the change would look like if adopted
$450,000 purchase price
$90,000 20% down payment – minimum amount down for uninsured mortgages
$5,475 land transfer tax (-$4000 if you are a first-time home buyer)
$360,000 total mortgage amount
What you would actually pay:
1.79% mortgage rate
$687 actual bi-weekly mortgage payment ($1,488/month)
What you need to qualify for with the current stress test
4.79% mortgage rate
$946 bi-weekly mortgage payment ($2,051/month)
What you will need to qualify for when the proposed changes to the stress test
5.25% mortgage rate
$989 bi-weekly mortgage payment ($2,145/month)
What you will need to qualify for when the proposed changes to the stress test
5.25% mortgage rate
$1,221 bi-weekly mortgage payment
You will need to qualify for 2% higher than your actual rate or 5.25% whichever is higher. The above example shows the impact to affordability these changes will make.
The time to buy is now if you want to avoid having to qualify under these new stricter rules.
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Sellers may want to consider selling because many buyers currently have more buying power than they will after the changes.
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See the OFSI website here for additional details.