Starting January 2018, the existing mortgage "stress test" will apply to all buyers (not just the ones with less than 20% down payment). Which means borrowers will qualify for approximately 20% less money.

For example, if you qualify for $400,000 today, in January, you will only be able to borrow approximately $325,000. Therefore, if you are putting down $100,000, today you could purchase a home at $500,000, but in January, you can only purchase a home for approximately $425,000. If you are considering purchasing a home, we recommend contacting us so we can discuss how this may affect you.

Below is more information from Jerry and Stephen Jackman at Think Mortgages 

OFSI implementing mortgages guidelines B-20 – on conventional mortgages, 20% or more down payment. Clients will be qualified at the contract rate +2% or no lower than the benchmark rate which is currently 4.89%.

Based on a 30 - year amortization buyers are losing approximately 18% of their purchasing power.

For high ratio mortgages – a stress test has been in place for the last year and there have been no changes made to those rules. All high ratio mortgages (less than 20% down payment) are qualified at 25 year amortization with a benchmark rate of 4.89%.

Moving forward – you must have a mortgage approval in place, issued by a lender, prior to January 1st to qualify under the old rules, no exceptions. This means your client’s job status and credit status cannot change drastically prior to January 1st until their closing date.

Presales – on presales you will still have to have an accepted offer, and a mortgage commitment issued by a lender before Jan 1 for your buyers to qualify under the old rules. There is some uncertainty as how long after January 1 you will have to complete your purchase (we will clarify before the end of the week). Also, a pre-approval is not valid to qualify a purchaser after Jan 1; you must have a signed contract and mortgage commitment prior to Jan 1 to qualify under the old rules.

According to the CMHC – 32% of mortgages in Canada are high-ratio (insured mortgages) and 68% of mortgages are conventional. This new set of mortgage guidelines should have a bigger impact as dictated by the ratio of loan that are conventional vs. high ratio.

Home owners with existing conventional mortgages will not be impacted by the new rule changes when they renew their mortgage unless they increase the mortgage amount or extend the amortization. Unfortunately if a home owner wants to port their mortgage to a new purchase they must re-qualify under the new guidelines.

Economists believe we will see a 5% drop in demand and a price decline of 2%-4%.

Article Source: Stephen Jackman & Jerry Jackman at Contact Jerry or Stephen with questions, or for your mortgage pre-approval.