New Mortgage Rules and the Impact on You!

New mortgage rules were announced this week, one in particular will have an impact on many Ottawa home buyers.

For home buyers with less than 20% down payment, purchases after October 17th, 2016 will be subject to new "stress tests" which will impact your purchase affordability.  This means your approval will be based on the bank's 5 year fixed, posted rate which is currently 4.64%.  When you consider that you were being approved prior to October 17th at a 2.69% rate or less....this will have a dramatic effect on HOW MUCH home you can buy.  Even if you can afford the higher because of the lower rate - the bank will only loan out based on the 4.64%.  They want to make sure IF rates rise you are not over your head.

I have a chart below showing the difference in your purchasing power.  Remember its only for those with less than 20% down.  

If you purchase prior to October 17th, the new rules will not apply.