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Review your mortgage NOW! Next year may be too late.

It’s begun.  The message is starting to sink in.  The new mortgage rules could eliminate 15% of Canadians from qualifying for a mortgage after January 1st, 2018.  The mad rush has started as mortgage inquiries are up significantly.


  • Anyone that has a mortgage renewal in next 12 to 20 months.
  • Anyone thinking of buying in the next 12 months.
  • Anyone that is needs or is thinking of refinancing their mortgage in the next 12 months.
  • Rental property owners.  Yes, you too.
  • Future retirees with lots of home equity (newsflash..the new rules don’t take into consideration how much equity you have in your home.. your net worth is also irrelevant… it’s all about how much income you earn and declare…)

All of these borrowers will be affected.  If you’re not getting the message, anyone with a mortgage should be getting a review done NOW.  Don’t wait until next year.  You may not qualify for a mortgage.

EXPECT HOME SALES TO SPIKE UP TEMPORARILY Continue reading “Review your mortgage NOW! Next year may be too late.”

OSFI announces strictest mortgage rules ever… what you need to know.


October 2016, our Federal govt announced a number of new mortgage rules including the infamous new ‘stress test’ for all insured mortgages.  Mortgage default insurance is required for all mortgages greater than 80% loan to value.  You have to qualify at the bank posted 5 yr fixed rate, which is usually around 1.75% to 2.00% higher than your actual rate, and with a maximum amortization of 25 yrs max.

These ‘rules’ were brought in last year to protect us from ourselves.   To ensure we could handle any large interest rate hikes at renewal time.  Sort of like big brother watching over us to make sure we don’t borrow more than we can afford. (btw, we already had lending rules in Canada.  Our mortgage arrears were and still are at record low levels.   Seems like our Banks, credit unions and other lenders are doing a pretty good job of lending.  Is more govt intervention necessary?  Most experts say no.)

Today, Jeremy Rudin, OSFI Superintendent, joined the party…. well, more like rained all over ever Canadian homeowner’s party (current and future).   OSFI, not wanting to be left out, announced they would impose more mortgage rule tightening for all mortgages that were UNDER 80% loan to value.    Again, to protect us from ourselves just in case interest rates should sky rocket at your renewal time.   Here’s a summary of the changes and how they will impact consumers, homeowners, and the real estate market:

  • A new minimum qualifying rate for uninsured mortgages.  The ‘stress test rate’ will be your contract rate + 2.00% or the 5 yr posted fixed rate, whichever is greater.(that’s right, your may have to qualify at a higher rate than those with insured mortgages above 80% loan to value.. how does that make sense?)
  • Federally regulated financial institutions must establish and adhere to appropriate Loan to value limits that are reflective of risk and updated as housing markets and the economic environment evolve (yeah, I’m not quite sure what this one means either.. stay tuned)
  • Federally regulated financial institutions are prohibited from arranging with another lender a mortgage, or combination of a mortgage and other lending products, in any form that circumvents the institution’s maximum Loan to value ratio or other limits in its residential mortgage underwriting policy. (this has dire consequences for those that won’t meet this historic new ‘stress test’.. effectively, the govt is telling you to not buy a home if you don’t fit in this new shrinking qualifying box…. or sell your home if you need to access the equity..)



  • buying with less than 20% down payment, no effect.  You already have a ‘stress test’.
  • buying with more than 20% down and you’ll have to pass a tougher test, that’s right, a tougher test than those with less than 20% down.  (Make any sense to you?  me neither.)
  • around another 15% of homeowners will NO longer qualify for a mortgage regardless of it being a purchase or if you wanted to refinance.
  • expect rental, condos or houses to become way more expensive as demand will spike.
  • we’ll see a spike in real estate sales from now until Jan 1st as homebuyers will scramble to get in prior to the new rules taking effect.
  • most credit unions are provincially regulated and for now, won’t be affected..  (that could change if the provinces amend their rules)



If you want to discourage speculators, make them hold the property for 5 or 7 years.  Bring in a declining speculation tax for anyone that sells a non-owner occupied home in less  than 5 years.  Reward those that hold real estate for longer periods.  You’ll have less transactions.  Encouraging longer holding times, more rental units on the market and higher vacancies.  More rental supply will also resolve high rents.  Bring back more realistic mortgage qualifying guidelines.  Encourage and promote buying investment properties.

A year ago, the Federal govt made several rule changes that effectively made it more expensive and difficult for consumers to borrow.  The list of changes was so long that most Canadians didn’t bother to react because it didn’t affect them that day.  But as we are seeing now, more consumers are experiencing reduced access to mortgage money.   They can’t refinance their mortgage.  They can’t draw on their built up equity in their homes.  It’s only when you need to borrow do you realize the extent of the changes.  Each and every one of us will be impacted.   These new policies will only make home ownership more difficult.  It will also slow our economy.

Perhaps the credit unions can pick up the slack and help …  stay tuned.. there will be more to share on these changes.     One thing is for certain.  You need to speak with an experienced Mortgage broker to understand what your options are.  It’s almost impossible to go it alone.. and you don’t have to.  Mortgage Brokers work for you, not the Bank.  They have access to dozens of competing lenders.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114

Mortgage Brief.. Mortgages rules explained… and why didn’t the govt consult experts?

Bill Morneautrudeau

They say we don’t read emails or articles anymore.. we just skim through them.   But some things can’t be understood with a quick glance.  The new mortgage rules will impact EVERYONE!

If you want to understand how they impact you, continue reading… If you don’t care or want to be oblivious, take the blue pill and move on.

I’ve put together a list of the mortgage rules so that you can understand what they mean and how they will impact you.   Hey, let’s give The Federal govt some credit… they’ve been transparent about a few things, right?:

  • They want house prices to drop.
  • They don’t want anyone to have a mortgage if their home is worth more than $1,000,000.
  • They don’t want you to ever refinance your mortgage.  You should only require a mortgage when you buy a house.
  • They don’t want you to buy a house and rent it out.  You should only buy a rental property if it has 2 or more units.
  • Mortgages should not be amortized for longer than 25 years.
  • They want rates to go way up.

Here’s the official update from our Department of Finance.

Here we go.. Forget the data and stats being reported today.  Those stats don’t matter!  We want to see the stats after March 30th, 2017.

Remember the mortgage rule changes of October 17th?  How about the ones on November 30th?  Get ready, we won’t see the full effect of these changes until after March 30th 2017.

That’s when the last of the mortgage approvals will have closed, that were done under the old rules. And all the new mortgage closings beyond this date, will have had to been qualified with the new rules.  This is when we’ll begin to see the impact of these rules… And we’ll begin to see just how many Canadians will be have been impacted.

If you think I’m wrong, read the rule changes below and tell me what other conclusions you can come up with. Continue reading “Mortgage Brief.. Mortgages rules explained… and why didn’t the govt consult experts?”

Mortgage tricks… and treats!

halloween-moneyHappy Halloween! And before the kids knock on your door.. just thought I’d send a quick mortgage trick and trick..

TRICK..  ‘Stress Test’ for mortgage qualifying.  The Finance Minister, Bill Morneau, blindsided Canadian Banks, Financial Experts and consumers when the govt introduced mortgage rules making qualifying even tougher.  The new rules mean consumers must qualify at the posted bank 5 year fixed rate.

TREAT... The reality of the new mortgage rules is that it’s not going to affect that many.  One of Canada’s biggest mortgage lenders told me, confidentially, that over 95% of their portfolio would easily pass the new stress test.  The REAL devil here is the Canadian Press.  Unfortunately, they are making this latest change sound like a death-blow for the real estate market.  Gauging my own clients profiles, I would say that even fewer than 5% would be affected.

If you’ve followed my site, you’ll know I’m a huge Variable rate advocate.  More than 90% of my clients have been in a Variable rate product.  And guess what?  They’ve always been able to qualify using the posted 5 yr fixed rate.

The govt wants to slow the housing market and property value increases.  I agree, we don’t want to see house prices continue unsustainable increases.   Not sure this latest change is the correct move.  Perhaps, this rule could have apply for higher priced homes only..?   Exclude homes less than $600k or $700k? Just a thought..   I’m also unsure the lack consultation or input from industry experts, was a wise move.  More open discussion is needed.  Just my opinion..

Happy Halloween.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114

Mortgage brief… New Liberal govt mortgage rule changes..and what it means.

Bill Morneauthumbs down Yesterday, Federal Minister of Finance, Bill Morneau, announced tighter lending rules.  The big focus is on the new ‘stress test’. To sum it up, here’s what’s gonna happen and how it will affect you.

First, let me say this..   IT’S NOT THAT BAD… It will affect those with tighter budgets, but not the vast majority of buyers.


-As of October 17, everyone must qualify using the Bank posted 5 year fixed rate.  Today, that’s 4.64% (well over the discounted 5 yr, which is averaging around 2.59%..lower with most Brokers).

-borrowing less than 80% of the value of your home allows you to extend your amortization to 30 years…. but not any now be capped at 25 years.

There were some other changes, but these are the ones that will affect us most.  So here’s some other facts the media may not be telling you:

-You remember I said it wasn’t that bad?  It’s true.  Over 90% of my clients are qualifying already, using the Bank 5 yr posted fixed rates.  I suspect that most homebuyers can qualify just as well on October 17, as they can today.

-I’ll repeat…Most homebuyers can qualify easily with a 25 year amortization, but choose to extend that to a 30 year amortization as a fail safe or preventative measure, just in case their incomes are affected in the future … job loss, family illness, child school fees, other financial crisis.

-The govt wants to stop house prices from rising in Toronto, Vancouver and other major urban hotspots.   But if you are an investor, earning good income, or have a good down payment, this won’t affect you.   Yes, some homebuyers will no longer qualify under traditional lending policies….

-But watch out for the secondary lenders.  Secondary lenders AREN’T offering loan shark rates, contrary to what the media might have you believe.  They will gain market share as traditional lenders can’t help these borrowers.  I’m talking about financial institutions that specialize in that gray market where borrowers don’t quite qualify but can still afford it.  They will pay 4% or 5%  on their mortgage.  (wasn’t that long ago that 4% was a fully discounted AAA rate).

More on this follow..   stay tuned.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114

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