Possible upcoming changes to the Ontario mortgage regulations guideline known as B-20 may impact whether you, as a home buyer, qualify for adequate mortgage financing.
What is Guideline B-20?
Guideline B-20 – Residential Mortgage Underwriting Practices and Procedures – sets out the expectations of OFSI* that, if implemented later this month, will see the Mortgage Stress Test be applied to people with more than 20% down.
These potential changes will impact the housing market by further reducing the number of Buyers who qualify for financing. Sellers will have a smaller pool of suitable Buyers, and Buyers will qualify for less financing (less house). These proposed changes would take effect in two to three months.
What is the Mortgage Stress Test?
As of Oct 17 2016 (one year ago today) all insured mortgage borrowers had to be capable of borrowing at the five year standard rate of 4.65% even though their actual mortgage rate would be less.
This same stress test may soon be applied to borrowers that do not require an insured mortgage because they have more than 20% down (or equity).
How does this impact me?
The answer to this question is different for every individual. However, if you would like more information on how Guideline B-20 may impact your future plans to buy a home, talk to Welsh & Co.
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*Office of the Superintendent of Financial Institutions