The Office of the Superintendent of Financial Institutions (OSFI) released new guidelines for the mortgage industry, which include a “stress test” for uninsured mortgages.
Home buyers with 20% or greater down payments will need to qualify for their mortgages using the higher of the average 5-year posted rate (currently 4.89%) or 2.00% higher than their actual mortgage rate. Initial calculations show that this will reduce purchasing power by roughly 16%.
Buyers with a $145,000 gross annual income can currently qualify for a $1,000,000 purchase price with 20% down. Under the new rules, with the same income, they will only qualify for a $840,000 purchase price.
The new guidelines will come into effect on January 1, 2018.