HUNTSVILLE, ONT. It is not the first time and it won t be the last time the Office of the Superintendent of Financial Institutions (OFSI) changed up the qualifying rules for uninsured mortgages (i.e. residential mortgages with a down payment of 20% or more).
Effective June 1, even with a hefty down payment, the minimum qualifying rate for an uninsured mortgage will be the greater of the mortgage contract rate plus 2%, or 5.25%. Why are they doing this? The aim is to protect homebuyers who are stretched too thin and have little wiggle room should rates go higher. In other words, this is going to make it more difficult for home buyers to qualify for a mortgage and reduces the mortgage amount a household can qualify for by roughly 5%.
Financial System Review 2021
A stable and efficient financial system is essential for sustaining economic growth and raising living standards. In our Financial System Review, we identify the main vulnerabilities and risks in the financial system in Canada and explain how they have evolved over the past year.
Info
Search the site
Financial System Review 2021
A stable and efficient financial system is essential for sustaining economic growth and raising living standards. In our
Financial System Review, we identify the main vulnerabilities and risks in the financial system in Canada and explain how they have evolved over the past year.
The
Financial System Review is a product of the Governing Council of the Bank of Canada: Tiff Macklem, Timothy Lane, Lawrence Schembri, Paul Beaudry and Toni Gravelle.
Publishing date: May 20, 2021 • 2 hours ago • 1 minute read •
Article content
(Bloomberg) Canadian officials announced further tightening of mortgage qualification rules, stepping up efforts to slow mortgage growth and cool a booming housing market.
The federal government said it will set a new benchmark interest rate to determine whether people can qualify for mortgages that are insured by Canada’s housing agency. The move matches a decision by the nation’s banking regulator to do the same for uninsured mortgages.
We apologize, but this video has failed to load.
Try refreshing your browser, or Trudeau Tightens Up Mortgages After Macklem Sounds Housing Alarm Back to video
(Bloomberg) Canadian officials announced further tightening of mortgage qualification rules, stepping up efforts to slow mortgage growth and cool a booming…
Central bank tries to scare Canadians about housing market for our own good
As if we needed a longer list of things to worry about. But by outlining financial dangers, especially in housing, the Bank of Canada hopes to help us avoid them.
Social Sharing
By outlining financial dangers, especially in housing, the Bank of Canada hopes to help us avoid them
Posted: May 21, 2021 4:00 AM ET | Last Updated: May 21
Canadian house prices continue to rise, but the Bank of Canada warns the market is at a point where a sharp price correction would hurt not just borrowers but the entire economy.(Graeme Roy/The Canadian Press)