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Elections & Changes For Canadian Home Buyers

With elections six months away, Canadian home buyers are hopeful for a solution to address the housing affordability issue and so are we. It’s undeniable that certain rule changes have made housing unaffordable for several home buyers across Canada, but these changes not only affect those trying to buy, they also affect Canadians who have been home owners for several years.

Often referred to as the “stress test”, home buyers and home owners are required to qualify for a mortgage on the greater of either: 2% above their contracted rate or the posted benchmark rate. This mortgage stress test drastically limits funds available to those trying to buy, refinance and even renew their homes. It is likely that our government will take action to hopefully make housing affordable again, we just don’t know how beneficial those changes will be to Canadians.

There are rumors of a proposed change that could cost Canadians an extra $40,000 of interest on the average $400,000 – here is our take on it.

Important Update – Last Chance to Traditionally Qualify

With summer in full swing, we hope you are all enjoying the weather just as much as we are. Although our team has been remarkably busy, our families have managed to plan a getaway up to the cabin that we’re very much so looking forward to, especially considering the close call we encountered. Last year the forest fires burned their way right up to our front door on Green Lake, miraculously our cabin managed to survive.  It’s been 2 years since our last visit and to celebrate it’s survival, we plan on making this a trip to remember.

While this summer has been busier than usual, we believe it’s about to get even busier. Tomorrow, the Bank of Canada is going to make another rate announcement and if I was a betting man (which I am) I would say rates are going up. In addition to the rate increase, rumor has it ALL of our lenders will be applying the “Stress Test” within the next 90 days.

Earlier this year, the federal Government implemented a new policy which required lenders to qualify clients at 2% above their contract rate, this new rule reduces borrowing power as much as 20%.

Up until this point we were fortunate enough to have small group of lenders who were not required to follow these guidelines, which in return made it easier to qualify for a mortgage. Now there are rumblings that these two institutions will follow suit shortly and also abide by the new policy, ultimately decreasing the mortgage amount you’d qualify for. 

If you are considering any financing in the future you might want to to consider pushing that time line up to ensure you still qualify.