Mortgage Update!!

Under Community, Finance, Real Estate

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Written on February 21st, 2020


I just found out the new stress effective April 6th has been slightly changed for buyers with 5-19% down payment buyers (or, “High Ratio” borrowers). The new stress test is rather convoluted but at least it’s something rather than nothing. It’s also a sign that the buyers who have 20% or more will also see some changes, we just don’t know when (yet).
Here is the old way of qualifying a high-ratio borrower:
The higher of 5.19% OR +2% on your contract rate. We haven’t seen this higher than 5.19% for a while therefore a typical $100,000 salaried borrower with 5% down could typically borrow 4.6 TIMES their income.
Here is the new way of qualifying a high-ratio borrower:
Effective April 6th, the rate will be +2% of the 4-week average rate. Using 2.79% as a typical 4 week average, therefore, we’re at 4.79%. A $100,000 salaried borrower could borrow 5 TIMES their income.
So we went from $463,000 to $500,000 for this borrower or 8% more than today. Not bad, right?

Here is the Government of Canada Press Release about the new stress test.
At a time when the market is absolutely ripping in our part of the world, this will help a tiny teeny little bit.On one hand, this is the change the Government is going to say “see! Look! We listened!”

On the other hand, this is the change that will have a very nominal impact in 99% of cases. Same with the “shared equity” program, this will only help the very few people out there who need to go to the absolute maximum.
Overall, when I look at my 2019 numbers, I noted that the majority of people do not go to the maximum ratios, the majority of them have down payments of at least 20% and the majority had amazing credit. Take a look at my 2019 numbers here.

Please let me know if you have any questions. I’d be glad to help get you pre-approved on the spot!


E: Jake@mortgagejake.comC: 416 910 4448