It has become a lot more difficult to buy a home in Canada, starting today.
In a bid to cool Canada’s overheated housing market, the elevated mortgage “stress test” has come into effect.
Canada’s federal banking regulator says loan applicants must be able to prove they can afford an interest rate of 5.25 per cent in order for their loans to be approved.
That’s regardless of the mortgage rate they’re offered, size of down payment, savings or income.
Officials say the purpose of the stress test is to make sure people can afford things if interest rates go up.
Housing prices have gone up astronomically over the past year, with many homes going as much as 400-thousand dollars over the listing price.
For more details on the mortgage stress test, please click here or here.
(1/2) Last month, we launched a consultation on proposed changes to the minimum qualifying rate for uninsured mortgages. https://t.co/cAG0FB9C5G
— Superintendent of Financial Institutions (@OSFICanada) May 20, 2021
Bracing the real estate market for what the economy might look like post-pandemic, the mortgage stress test will get tougher in Canada on June 1.
The minimum qualifying rate will rise to 5.25% for uninsured 🏡 mortgages.
How this might impact homebuyers: https://t.co/JCRGmmKGnD pic.twitter.com/ersAi8RDmL
— FCT (@FCT_Canada) May 28, 2021