As you may have heard in the news, OFSI has announced the new stress rate as of June 1st will now be 5.25% for insured and uninsured mortgages instead of 4.79%. This has been enacted to help cool the market. This may make qualifying for some a little more difficult as they may qualify for a lower purchase price than before.
What is a mortgage stress test? Once you apply for a mortgage, you are offered an interest rate that is used to calculate your monthly mortgage payments and represent the amount of borrowing money for your home purchase. The stress test requires you to qualify for a mortgage at a higher rate than you’ll actually pay to make sure, if rates increase within your term, you are able to still make those monthly payments.
These changes are important because they are being brought on by Canada’s hot housing market – prices have historically risen across the country especially in urban areas like Toronto. With the market becoming overheated, the adjusted stress test will ensure that Canadians are able to afford the homes despite a rise in interest rates.
A higher qualifying rate will impact Canadian homebuyers nonetheless. If you would like more information regarding the stress test and how it will affect you, please give us a call to speak with one of our mortgage specialists to see how we can help you at (416)-621-7501. We will guide you and help you with your mortgage process.
