The Canadian Banking Regulator, Office of the Superintendent of Financial Institutions (OSFI) gave guidance that they were planning on tighten mortgage qualification for uninsured mortgages. OSFI suggestion of the higher qualification rate was proposed in April. The market had sufficient time to analyze, internalize and educate our clientele as we fielded their calls and inquires. Marc Crossman of Alberta Mortgage Professionals suggested in a recent article that the proposed OSFI changes were aimed primarily at the Vancouver and Toronto GTA markets. https://edmontonjournal.com/life/homes/proposed-mortgage-rule-change-likely-to-sow-more-anxiety-than-cool-prices-mortgage-broker-predicts
However, last Thursday the Finance Minister advised the federal government would align with OSFI and extended the higher qualifying rate to insured mortgages as well. This news took most in the mortgage industry by surprise, given we were just over a week before the June 1st deadline.
For the consumer generally, the higher qualification rate will reduce the purchasing power of buyers by approximately 5%. A client qualifying for $375K mortgage before the changes, will qualify for approximately $350K after the rule changes.
Two things to consider: If you are thinking of purchasing a home in the next 3-4 months, get pre-approved prior to June 1st. Some lenders may grandfather your application at the more favourable rate of 4.79%. This is lender dependent.
Secondly, if you were previously pre-approved you should contact your mortgage broker to confirm if your lender will honour your lower qualification rate, and if not getting a new pre-approval as soon as possible.
If you need assistance or have any questions regarding pre-approvals or these changes don’t hesitate to call us at 780 701 3888 or email email@example.com