Borrowers shouldn’t be put off by a new ‘stress test’ about to be introduced for new prospective homeowners, says a Vancouver mortgage broker.
Property buyers seeking an insured mortgage, regardless of how much they have paid as a down payment, will now be subject to a mortgage rate stress test.
The new rules were already in place for many mortgages where buyers put down 20% or less.
But Dominion Lending broker Angela Calla says the changes won’t affect buyers as much as they fear.
“Already in Canada, to get a mortgage if you were taking anything other than a year-year-fixed term, you were already qualifying at the Bank of Canada rate for something that we saw come into effect years ago. I think the psychological impact has more than the actual numbers. It doesn’t matter where the market is, there are deals in every single market.”
The new move is expected to decrease the amount some lower-income borrowers are allowed to take on as a mortgage, in some cases by as much as 20%.
And Calla says with the introduction of the new rules, buyers could actually see more house-hunting opportunities open up as a result.
“When you are looking to purchase when everybody else is kind of sitting on the sidelines because they don’t understand what’s happening in the market, that’s generally where the buyers’ opportunities are. So it just depends on exactly what this means for you and having an understanding of your affordability.”
The new rules were announced last month by federal Finance Minister Bill Morneau as a part of a package of reforms aimed at stabilizing the housing market.
Among the changes were a clampdown on a loophole allowing home sellers (foreign and otherwise) to claim a capital gains tax exemption when selling their home.
The exemption is meant to be used only once per year, on a principal residence, for Canadians only, but has come under scrutiny after reportedly being widely abused.
Canadian mortgage brokers are reporting a flurry of borrowing as home buyers try to get under the wire before new “stress test” rules take effect.
Mortgage market watcher Rob McLister, founder of RateSpy.com, says brokers were swamped as borrowers tried to get ahead of the new rules.
“We are seeing a significant surge in volume. I did see a survey of seven mortgage brokers and they were reporting increases last week of anywhere from 35-150% increase in their volumes.”