On October 17, 2017, OSFI (the Office of Superintendent of Financial Institutions) announced mortgage rule changes that will come into effect starting January 2018.
The first change involves using a new qualifying stress test to all uninsured mortgages. People that would be affected by this includes home buyers with more than 20% down payment and also existing home owners that are looking to refinance their homes. The new rules require these uninsured mortgages to qualify using the mortgage contract rate plus an additional 200bps (or 2%). This change applies to all terms and fixed or variable rates.
The second change requires lenders to adjust their LTV (Loan-to-Value) measurement and limits according to the risk. Mortgage lenders such as credit unions and private lenders would be exempt.
The third change is restrictions on lenders (except for credit unions and private lenders) to be prohibited from offering or arranging a bundled mortgage to avoid LTV limitations.
If you’re not sure how the upcoming mortgage lending changes may affect you, please feel free to contact me.
For more information, please see: Change of Space – October 18, 2017