Will You Pass the Mortgage Rate Stress Test?

home mortgage health check up A doctor may prescribe a stress test to safeguard your health by monitoring breathing, blood pressure and heart rhythm.

The Department of Finance is prescribing one to protect the financial security of Canadians and support the long-term stability of the housing market in Canada.

A Stress Test Example

Under the new rules, a five year fixed rate mortgage at 2.39% must be “stress tested” by qualifying at the Bank of Canada posted rate (4.64% as of Oct 19, 2016).

Currently insured mortgages with a term of less than 5 years, and/or a variable rate mortgage had to qualify on the Bank of Canada rate. Starting November 30, 2016, this requirement will also be extended to low ratio mortgage insured mortgages.

How does this affect a home buyer with less than 20% down payment?

The biggest effect will be on the amount that the home buyer will be able to qualify for. Previously, the borrower qualified at the lender contract rate. Now the home buyer must qualify at the Bank of Canada rate.

The bottom line

The net result is an approximate 20% reduction in the amount of mortgage money available.

How does this affect a home buyer with a down payment of 20% or more?

There is no significant impact anticipated for home buyers placing 20% or more down.

Do I still have the option to refinance my home?

Yes, home owners will still have the ability to refinance up to 80% of the value of their property. Specifics may differ from lender to lender.

Restricted insurance for low-ratio mortgages

Mortgage loans that lenders insure for conventional mortgages will be required to meet the eligibility criteria that previously only applied to high ratio mortgages. That means that there will most likely be higher costs for lenders with these loans. The question is, will those costs be passed along to you, the consumer and how much? Stay tuned for more updates about this change.

How Tracy Irwin can help

Now more than ever home buyers will rely on mortgage brokers like Tracy Irwin for their guidance and expertise in navigating these regulatory changes. The greatest value a mortgage broker can provide is the knowledge of the lending environment and in choosing which Lender is best suited for your needs. Book a complimentary consultation with Tracy Irwin today.

Learn more about these regulatory changes and how much home you can afford. Download the mortgage-rule-update-oct-21_16 today.

September’s Run-away Ride-away Weekend

Tracy Irwin running for RachaelSaturday, September 24

It was a busy weekend for Tracy. First up was Running for Rachael, a 10k run on the Hamilton waterfront to help raise funds for suicide prevention and reduce the stigma associated with mental illness.

The mission of Running for Rachael is to encourage discussion about youth mental health and illness and remove the associated stigma. Funds are raised for the Suicide Prevention Community Council of Hamilton for school-based mental health grants that foster help seeking, reduce stigma and promote mental health awareness. Learn more about Running For Rachael.

Ride Away Stigma starting lineSunday, September 25

Next up was the 50k Ride Away Stigma at the Dundas Driving Park, Dundas.

Our very own Tracy Irwin was the Coordinator for the 3rd Annual Ride Away Stigma event focused on raising funds so that, as Ride Away Stigma founder & cyclist, Danielle Berman shared, “No one should ever suffer behind closed doors for fear of judgment, humiliation, or damage to reputation. It is now my mission to help remove the stigma associated with mental illness and to encourage open discussion about it. I want to help others feel comfortable seeking help and to find their voice when all seems lost.” Learn more about Ride Away Stigma.

Total funds raised this weekend $20,000

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