The Karen Millar Team

The Shops at Don Mills
8 Sampson Mews #201
Toronto, ON
M3C 0H5

1.877.366.SOLD (7653)

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Signature Realty

Wednesday, 5 October 2016

Mortgage Rules

Thank you to Jake Abramowicz that emailed this information to me on Monday:

Effective this morning the Finance Minister announced a major #mortgage #rule #change that will affect YOUR clients (and mine, too!)

As I had predicted on September 8th effective immediately, all borrowers have to now qualify at the current 5 year POSTED rate.



Well, the qualifying rate is the rate that we judge someone's ability to get financing on a mortgage. Up until recently we could qualify anyone at the 5 year discounted rate (today around 2.49%) and not the posted rate (today 4.64%).

How this affects affordability is crucial because if you have less-than 20% down you must qualify for any mortgage at the new, higher qualifying rate. Let's look at a real-world example:

Steve and Jennifer make $110,000 combined and have $75000 saved but are looking for homes in the $750K range.

Under the old rules, they could have borrowed $700,000.

Under the new rule, they qualify for a $570,000 mortgage.

WOW. That is a $130,000 drop in affordability. Their only option is to get to 20% down payment OR buy something smaller, cheaper.

Note this is hot-off-the-presses stuff and I've put in a bunch of calls to see how each lender will implement this, but suffice to say this was the proverbial shoe that we were waiting to drop.

Call me or email me anytime with any questions!


Jake Abramowicz

The Mortgage Jake App is available for iTunes & Android

I've been interviewed in such outlets as: Bloomberg TVMoney SenseGlobe and MailToronto Star and CFRB 1010 Talk Radio.

Please call me if you have any questions. Have a great weekend!

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