If you’ve been on the fence regarding selling your home or taking that seemingly impossible plunge into the Canadian housing market for the first time, you could soon wish you dived in a little sooner.
The government’s new mortgage stress test guidelines came into effect in June, resulting in some people qualifying for between $14,000 and $47,000 less or roughly four to five percent less in terms of their overall mortgage, according to the Financial Post.
Robert Hogue, senior economist at RBC Economics explained that the change isn’t “Immaterial,” but that he doesn’t expect it to significantly shift the booming Canadian housing market.
Hogue says that the “purchasing power reduction” won’t impact all buyers and that it should only affect people at their max purchasing price. With this in mind, it could create “a bit of a cooling effect,” he says.
Buyers applying or renewing their mortgage are now required to prove they can handle an interest rate of 5.25 percent, an increase from 4.79 percent with the previous rules.
It’s also likely that only “one in five insured borrowers” will be impacted by the change, according to Robert McLister, mortgage editor at RatesDotCa. McLister also goes on to say that he expects the overall impact on the housing market to be “relatively modest.”
According to the Office of the Superintendent of Financial Institutions, the change goes into effect as of June 1st and will primarily impact homebuyers with uninsured mortgages and downpayment of 20 percent or more.