Special Alert | Canada’s New Mortgage Rules
In Canada, as of January 1st, 2018 the Office of the Superintendent of Financial Institutions (OFSI) has set new regulations that will require anyone seeking to secure a new mortgage or refinance an existing mortgage qualify using OFSI’s stress test.
So what does this mean? Under the new regulations as of January 1st, 2018 anyone looking to secure a mortgage will need to qualify not only for the rate negotiated as part of their mortgage contract, but also at their current rate plus 2%, or the five-year benchmark rate published by the Bank of Canada (now 5.14% as of January 2018). For example, if you are currently pre-approved at a rate of 3.5% you now must demonstrate that you could afford to pay at a rate of 5.5% (contractual mortgage rate of 3.5% plus 2%).
Anyone who secured a formal approval on or before December 15th, 2017 is exempt from the stress test, even if their closing is after January 1, 2018.
TheMIGroup continues to monitor the situation, and will provide further information as it becomes available. Should you have any questions, please reach out to your dedicated MI contact.