The Canadian bank regulators, Office of the Superintendent of Financial Institutions (OSFI), are proposing a higher stress test level in order to curb the hot market and ensure that buyers do not over extend themselves if mortgage rates increase.
If the change is approved, it's currently scheduled to come into effect June 1, 2021. As this will reduce the amount of money buyers will qualify, it will make it more difficult for some home buyers to find the home they love.
This change would only affect uninsured mortgages (e.g. buyers with a down payment of 20% or higher). The current rate used for the stress test is 4.79% and is proposed to increase to 5.25% (or two percentage points above the market rate, whichever is higher).
If you're thinking of buying a home with an uninsured mortgage, we recommend getting pre-approved well before June 1. Contact us for a list of great mortgage professionals. As always, we're here to help in any way we can.
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