New rules announced by the Federal Government on October 3 will make it more difficult to qualify for a loan.
Effective October 17, all homebuyers requiring mortgage insurance must quality based on the posted rate for a five-year term, now 4.64 per cent. The impact of this change is that many consumers will receive smaller loans.
In Canada, mortgage insurance is required federally on mortgages with a down payment of 20 per cent or less. This insurance, which protects the lender in case of borrower default, gives lenders the flexibility to offer borrowers with low down payments the same low interest rates they would offer to homebuyers with more equity.
The largest private mortgage default insurer in the country, Genworth Canada has stated “homebuyers would need to consider buying a lower priced property or increase the size of their downpayment.”
If you have any questions about the new mortgage rules or any other real estate matters, feel free to “leave a comment” below and we’ll get in touch. Of course you can always call us at 519.586.7922 or using “Ask Us Anything” at EriesEdge.com.