New mortgage rules are now in effect, which are meant to stabilize housing markets across Canada, primarily in Toronto and Vancouver where prices have skyrocketed.
All insured mortgage applications will be subject to a “stress test”; this will ensure the borrower can continue to make payments on their loan even if their financial situation changes or interest rates rise.
Up to this point, this was not a prerequisite for fixed-rate mortgages over five years, but the move will no doubt add another obstacle for want-to-be first time home buyers.
Interest rates have held steady in Canada at 0.5%.
Earlier this month, Canada’s Finance Minister Bill Morneau announced buyers with a down payment of less than 20% would need to qualify for the Bank of Canada’s five-year fixed rate of 4.64%.