October 3rd Announcement by the Finance Minister’s Office
Big news on the mortgage front as the Bank of Canada has announced qualification changes effective October17th 2016 by implementing an interest rate stress test to all insured mortgages. The main change is directly related to the qualification rate at which buyers use to obtain financing for insured fixed mortgages on terms of 5 years or longer.
Currently and up to October 17th, buyers can qualify for a fixed rate mortgage for terms 5 years or longer using the actual rate given by the lender (contract rate). With the change that is being put in place, all buyers that are looking for an insured mortgage will now be required to qualify at the Bank of Canada’s bench mark rate, which is currently at 4.64%.
What does this mean for buyers purchasing an insured mortgage before and after October 17th?
For buyers with a pre-approval (currently at their maximum qualifying ability under their current lenders contract rate for a term 5 years or longer) they have until October 16th to submit an accepted purchase agreement to their lender to qualify.
On the contrary- For buyers as mentioned above whom do not submit an accepted offer by October 16th to their lender, they will then be required to re-write their pre-approval qualifying at the Bank of Canada’s bench mark rate(currently at 4.64%).
At the end of the day, purchasing power for consumers after October 17th looking for a fixed rate mortgages will decrease on average about 20%. As the qualifying interest rate rises to 4.64%, this will lower the pre- approval amount for buyers which have previously been measured against their lenders contract rate, (currently in the neighbourhood of 3.29- 3.39%).
If you’re one of the buyers who’s currently on the fence for purchasing in the near future, if anything this should shove you off and get your accepted offer in before the changes take in effect on October 17th 2016.
Please feel free to contact me with any questions or concerns regarding the above.For more information on the above changes and other news, please click this link.
Author:David Jablonski Phone: 403-975-5915 Dated: October 4th 2016 Views: 72 About David: Active in Calgary real estate since 2007, David has seen every type of market and knows how to help ...
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"David is easily the hardest working Realtor I have ever met. I called and texted him day and night, weekdays and weekends. No text ever went long before a response; I can honestly say I don't even know what his voicemail sounds like, he picked up every time. David always made time for me and my endless litany of questions, random thoughts, and occasional venting.
I used David first to purchase a home - the offer and acceptance was initially straightforward and painless. My later dealings with my bank, however, was an exercise in frustration - they did not book their assessor in time, and as a result David had to go back to the buyer repeatedly to negotiate extensions on my conditional sale.
We then listed my house and the real work began. The photography team that David works with made my humble little house worthy of the cover of Homes and Gardens. He provided me with beautiful brochures to include in my showings. They looked so good, I could have bought my house all over again.
Because I was probably Genghis Khan or someone equally horrible in a previous life, I continue to burn off quite a bit of bad karma. This iteration came in the form of an endless stream of failed conditional sales - four of them. My house was very popular (117 showings!) but because it was a starter home we were dealing with a lot of first time buyers - each failing conditions for their own reasons.
This is really where I saw David's value - he worked my sale - hard. After every showing, he followed up. He tracked those potential buyers that were interested but not yet ready to pull the trigger, and he regularly checked in with them. David passed on all the feedback to me, and we regularly strategized to determine if there was an obstacle that I could overcome with a little spending.
When a conditional sale fell through, David switched immediately back into sale mode and hit the phones, calling potential buyers to advise them that my house was back on the market.
David is highly strategic, knowledgeable, accessible, and capable. I have already recommended him to anyone that will listen. He's the bomb."