There is big news that was announced earlier this month and it might affect home buyers in the market for a mortgage. The Office of Superintendent of Financial Institutions (OSFI) released a proposal to increase the qualifying mortgage rate for uninsured mortgages. Uninsured mortgages are ones where there is more than a 20% down payment.
The new qualifying rate will increase from the posted 5 year fixed rate, which is currently 4.79%, to the contract rate plus 2% or 5.25%, whichever is greater. This would effectively qualify consumers for 4% less mortgage. On a $1,000,000 purchase with a $200,000 down payment, buyers would qualify for around $755,000 vs $800,000.
Many are concerned that this could have an effect on our market by slowing it down.Continue reading “New, tougher mortgage stress test? What will this do to our red hot real estate market?”