Federal government announces new mortgage changes
26th Oct 2016
On October 3, 2016 the federal government announced a number of changes to housing rules meant to protect the long-term stability of the market.
According to an article in the Vancouver Sun, the changes are aimed at “curbing risk in the country’s housing markets, including closing a tax loophole and tightening mortgage insurance rules to prevent borrowers from taking on too much debt.”
Principal residence tax exemption
According to the Financial Post, “foreign buyers who were not residents at the time a home was bought will no longer be able to claim a principal residence exemption, and families will only be able to designate one property as the family’s principal residence for any given year.”
Stress tests for insured mortgages
The Financial Post said the federal government will implement mortgage stress tests for all insured borrowers. “Homebuyers who make a down payment of at least 20 per cent of the property purchase price — will begin facing the same stricter eligibility requirements as homebuyers with lower down payments. The stress tests will include seeing whether homebuyers can afford their mortgage payments if interest rates rise.”
Mortgage Qualification Rate
As of October 17th, all mortgage applicants will need to qualify at the Bank of Canada’s 5 year fixed posted rate. Currently, buyers could qualify for a mortgage based on the much lower discounted rates offered by lenders.
Please contact Vertuity Mortgage for more information about the recent Canadian mortgage changes.
Posadzki, Alexandra. (2016, October 3). Federal government announces new measures intended to reduce housing market risk. Vancouver Sun. Retrieved from http://vancouversun.com/business/real-estate/bill-morneau-to-announce-preventative-measures-for-canadas-housing-markets-today?__lsa=e78f-8dec
Shmuel, John. (2016, October 3). Federal government closes tax loophole used by foreign home buyers, hikes mortgage scrutiny. Financial Post. Retrieved from http://business.financialpost.com/personal-finance/mortgages-real-estate/federal-government-closing-tax-loophole-used-by-foreign-home-buyers