Canadian home buyers must now quality for 2 points above the posted rate despite having 20% down. ‘Guideline B-20 now requires the minimum qualifying rate for uninsured mortgages to be the greater of the five-year benchmark rate published by the Bank of Canada + 2%’. This will decrease home buyer’s borrowing power by about 20%. This drastic measure is to ensure Canadian’s don’t get into trouble when interest rates rise again.
These new rules will be in force January 1st, 2018 so if you are looking to buy a home before the New Year, it may be prudent to get all the facts from your mortgage broker and get shopping with your Realtor! Please note that pre-approvals will not protect buyers from these rule changes.
