Since the beginning of the year, the Canadian federal government has introduced a new rule to be met before a mortgage is granted. Any borrower wishing to resort to an uninsured conventional mortgage must pass the stress test . Is it a drag on the purchase of a new home ? Everything depends. Here are our explanations.
If you are not yet familiar with the new stress test, here is a brief recap. The purpose of this audit is to help you repay your mortgage if interest rates rise . The reason is simple: after years of flat rates, they began to recover from 2017. The federal government wants to ensure that citizens who borrow will be able to cash the financial impact of a lawsuit. of the trend.
The differential that you must be able to assume was set at 2% . For example, if your 5-year rate is 3.3%, you must have sufficient income to assume a 5.3% interest expense. This is not a novelty in itself: insured mortgages (down payment of less than 20%) have already been submitted since 2016.
To prevent Canadians from finding themselves in financial difficulty while the trend is up rates. After almost a decade of low interest rates, you have to get used to the possibility of rising rates. The risk is all the greater because of real estate valuations in Canada.
It will not be especially difficult to buy a house in 2018 because of the stress test. But you may need to review your ambitions somewhat downward. This measure could have favorable consequences, namely to curb the rise in real estate prices in Quebec because of this mechanical decline in the purchasing power of first-time buyers.
Should I postpone my purchase?
Difficult to answer this question as personal factors influence the response. Is the budget you can get through your mortgage really insufficient to cover your needs? Are you going to risk missing out on an opportunity that may not be represented anytime soon? Whatever your situation, you have every interest in not rushing.
More than ever, shopping for the best mortgage rates and favorable terms is crucial. To achieve this, you can count on Vincent Le Saux, mortgage broker in Montreal and Brossard . I am at your disposal to answer all your questions on the simulation of crisis or other, without engagement. Opportunity to meet you at the address of your choice in the region ( Verdun , Outremont, Ville-Marie, etc.).