How will the new mortgage rules affect your real estate purchasing power?
Callum Greig from Prime Mortgage Works discusses with Sarah West how the new rules can and could affect your real estate decisions going forward.
As of January 1st, 2018 the Canadian Government implemented new Mortgage Rules affecting what you can afford. Banks now must use the posted rate or 2 percentage points above the banks best rate regardless of your down payment. If you qualify for a mortgage, the rate you will be charged at is lower. For example, on a 3 year fixed rate of 3.19% you will have to qualify at 5.19%. If you qualify for the mortgage you will be changed at the lower rate of 3.19%.
Callum has been seeing more people, who are coming to see him for mortgage help, looking at purchasing condos. For some buyers the new rules have taken them out the house market and into the condo/town house market because of their reduced spending power. What people may have qualified for in 2017 could be less in 2018. The question you need to ask your self, if you have not seen a mortgage professional since the new rules have taken affect is: “Do you still qualify for the same mortgage amount that you did in 2017?”
Sarah asked Callum what the biggest surprise he is seeing when people come to see him to discuss mortgages. He states the biggest surprise his customers see is their purchasing power, under the new rules, has decreased by as much as 20%.
If you are new to the market or still looking from last year be sure to visit your mortgage professional to confirm what you are able to afford going forward, regardless of what market you are in Victoria, BC or Canada in general.
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