New mortgage rules take effect today

Here’s what you need to know



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TORONTO – New federal rules that will cut into the purchasing power of some first-time homebuyers take effect today.

The rules involve a stress test for all insured mortgage applications to ensure the borrower can still service their loan in the event interest rates rise or their personal financial situation changes.

Until now, stress tests were not required for fixed-rate mortgages longer than five years.

The federal government is making the change to try to stabilize the country’s housing markets, particularly in cities such as Toronto and Vancouver where prices have gone through the roof.

Canadian mortgage brokers reported a flurry of borrowing last week as homebuyers tried to get in under the wire.

Toronto-based broker Matthew McKillen estimated that he was 30 to 40 per cent busier this week than during a normal week.

Here are the changes and what they mean for you:

You need to report sale of primary residence to CRA »

How mortgage insurance changes will impact you »

Fixed-rate borrowers must now qualify at the posted rate »

2 comments on “New mortgage rules take effect today

  1. A few comments, if I may.
    1 – This change will cut into the borrowing power of all buyers, not just first time home buyers.
    2 – Splitting hairs, but it was 5 years or longer. This now opens the door for competition on shorter term mortgages which may be the only benefit to buyers.
    3 – To stabilize a market (or close the barn door long after the horses are out) usually leads to more issues, often unforeseen. One that I see right out of the gate is that there are multiple unique housing markets throughout the country. Some are hot and some are cold. By shrinking the ones that are already cold you hurt those communities. Ultimately, no one cares that a market is too hot – they should care that there is limited or no affordable housing. This does nothing to change the negative impact of a “hot market” and help those priced out of the market or looking to have affordable rental accommodations.
    4. I find it ironic that Canadians want a higher dollar – but don’t want foreign money coming into Canada if they’re buying real estate. No issue with stocks, bonds, or treasuries?


  2. Lets not forget the ripple effect that the goverment put on all Canadians. From a builders point of view the ripple effect that will arise from this will be major. The 6-8% of market they say will be affected is ludicrous. It will be 90%, beacuse the 10% of the wealthy will never be affected. The ripple: The builder cannot sell their product until a customer can save enough for the larger down payment, The builder now cannot build as many homes and the sub-trades no longer have work, the suppliers and manufactures of products no longer have as many sales, the effect continues the employers to these companies start laying off employees due to lack of sales. The layoffs will be enormous. People start losing jobs, foreclosures are happening more and more. Did the finance minister comtemplate the ripple effect on his decission? This is surely not the way to stimulate an economy that is slow already. If it is just the high high end homes sales, then they should come up with a better solution for those only, and not railroad all of Canadians in believing they are doing them good for the economy.

    Pat McGaffey


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