We all know that Finance Minister Bill Morneau, announced new mortgage and housing rules on Monday, so we caught up with Mortgage Specialist, Danielle Hill of Dominion Lending. We asked her a few questions to help us get an overview of the upcoming changes and how it affects us.

ULG: What is the new “stress test” for high ratio (insured) mortgages mean for buyers?

DH: The “stress test’ is referring to the new qualification standards. Any buyer wishing to purchase with insurance (either conventional or high ratio), must now qualify at the Mortgage Qualifying Rate (MQR rate - today, being 4.64%). Simply stated, a buyer now has to qualify at a higher interest rate, and in turn, will not qualify for as high of purchase price as before.

ULG: What exactly will happen on October 17th and how will it impact buyers with or without existing mortgage approvals?

DH: Any buyer that does not have an approval in place by October 17th will be subject to qualifying under the new regulations. Although lenders have outlined the 17th as a cut off, its our experience that anytime a major change comes into effect, all lenders become very back logged. It is prudent for anyone to get their application in as soon as possible.

ULG: We heard something about mortgages having to be funded by March 2017, can you elaborate on that deadline?

DH: Any existing approvals in place will be honoured by lenders - however, they must fund by March 1st 2017 or they will be subject to new qualification standards.

What does all this mean? 

Approved for a mortgage of $650,000? Not after October 17, 2016. Under the new rules, you can now afford $510,000. With this taking effect, the already low inventory (and hot!) condo market is about to heat up even more.


Have more questions or want to jump start your approval process ASAP, hit reply or call/text us at 416-624-8854.