The New Rules

new-mortgage-rulesThe changes announced by the Government of Canada, Department of Finance, on October 3rd, go into effect today!  Here is what you need to know:

  • For now, different rules apply to “conventional” loans (less than or equal to 80% financing) vs. high-ratio loans (80% + financing).  On November 30th, the same new rules apply to both groups.
  • Effective today, insured high-ratio loans must qualify using the interest rate that is the greater of the contract interest rate or the Bank of Canada’s current conventional five-year fixed posted rate*.
  • Most lenders will honour any pre-approvals they committed on prior to today, up until they expire.
  • For some lenders, if a legally binding agreement of purchase and sale was signed prior to October 17, 2016, the old rules will apply.  The mortgage application will be qualified using the contract interest rate regardless of the application or closing date.
  • Homeowners with an existing insured mortgage or those renewing existing insured mortgages are not affected by the new rules.

  the current five-year posted rate is 4.64% as of October 17, 2016

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