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Mortgage Rule Changes Effective October 17

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Canadian mortgage regulators announced that, as of October 17, all CMHC-insured high-ratio mortgages (downpayments of 20% or less) will have to be qualified using the Mortgage Qualifying Rate (MQR) which is 4.64% currently. This is slightly more than double today’s average 5-year fixed-rate. The change is intended as a “stress-test’ to ensure borrower affordability of future mortgage rate increases.

Why the change?

The government is responding to concerns that sharp increases in house prices in cities like Toronto and Vancouver could increase the risk of defaults in the future should mortgage rates rise.

How will this effect home purchases and refinances?

As if affordability for housing in Toronto and Vancouver weren’t difficult enough already, the new qualifying rate will lower the mortgage amount that borrowers qualify for.

Here’s an example:

Annual income: $80,000

5-year mortgage rate: 2.29%

Down payment amount: $40,000

Before October 17:

Maximum purchase price: $520,000

After October 17:

Maximum purchase price: $425,000

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How we can help

Matrix Mortgage Global believes this will push more borrowers out of the bank’s traditional lenders towards alternative lending solutions. If your mortgage loan application has been rejected from the bank, don’t give up! Call us today at 1.800.429.0717 to see how we can make your home purchase or refinance possible.

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