Breaking Mortgage News
The current rule for mortgage approvals is that you must qualify as if the interest rate is 4.79% or your contract rate plus 2%, whichever is higher. This is known as the stress test rate. Its purpose is to determine if someone can still afford their home even if rates were to rise.
Effective June 1st, 2021, the stress test rate is being raised to 5.25% on both insured and uninsured mortgages. It is estimated that this increase will decrease homebuyers’ purchasing power by around four to five percent.
Unfortunately, as of June 1st, most pre-approvals under the previous stress test will no longer be accepted and you must qualify at the new rate.
If you currently have a pre-approval with Valko Financial, please call our office at (519) 745-8019 to review the amount that you are qualified for. We are still committed to arranging mortgage financing for the purchase of your new home!
Reception on the rule changes has been met with mixed responses. Mortgage Professionals Canada view the rule changes as detrimental to young, first-time homebuyers.
“Given the rapid rise in prices, making qualification more stringent now will disqualify many of the Canadians the government has promised to support,” they added.
If you would any inquiries about the rule changes, please reach out to email@example.com