Alpesh Patel REAL Estate

On 17- October, The Office of Superintendent of Financial Institutions Canada has announced the revised guidelines, which comes into effect on January 1, 2018.

OSFI* is setting a new minimum qualifying rate, or "Stress Test" for uninsured mortgages. Under the new rules the minimum qualifying rate for uninsured mortgages to be the greater of the 5 year benchmark rate (4.89%) or the contractual rate + 2%.

Current Conventional Mortgage(20% down payment) 5 years rate is 3.49%. Today if any borrower put 20% down payment, qualifies at 3.49% but from Jan 1, 2018 has to qualify at 5.49%(3.49%+2%).

Suppose borrower with income of $80,000, no debt outstanding, 20% down payment qualifies for $530,000 property value at 3.49% rate of interest.

As of Jan 1, 2018 if everything remains the same, now the borrower will qualify for $430,000 only.