The proposed changes for increasing the qualifying rate, not yet set in stone, is targeting purchases with 20% down payment or more, which equates to about 5% less borrowing power.
This potential change will NOT impact borrowers putting less than 20% down on a purchase.
Did you know you don’t have to be a first-time homebuyer to put 5% down?
The Office of the Superintendent of Financial Institutions (OSFI) is implementing the revision and will impact Banks specifically, this will not affect Credit Unions or many Mortgage Finance Companies so if you are putting 20% down or more you will have options.
So, who does this really impact?
The lower to middle class who’s are barely making the debt servicing ratios as is
Be extra cautious when purchasing pre-construction that you more than easily qualify and are not ‘just squeaking through’.
*Side Note* We do have lenders who will buy on assignment for the current price! (not the original price) With the builder’s consent
Will this slow down our crazy hot market? Probably not…
Did you know how long it takes to get a building permit for a warehouse?
Here is the wait for permits:
South Korea: 28 days
Singapore: 36 days
Denmark: 65 days
Finland: 65 days
Toronto: 249 days
Source: CD Howe institute testifying at Industry committee on the Gatekeeper Economy.
What will help?
Increasing the supply could actually help. The Green-belt has been a cheat sheet for Real Estate investors who have understood we can’t build past a certain and the population keeps rapidly growing in the GTA which boils down to economics 101…supply and demand.
They are planning the changes to take place June 1, if you already have a commitment with a lender and closing after the date it will not affect your ratios.
