The government this morning announced three changes to the manner in which mortgages will be underwritten in Canada. These changes are
1) All borrowers/home buyers to be qualified on the 5 year fixed rate regardless of which product they are opting for
2) Maximum loan to value on a refinance is reduced to 90% from 95%
3) All “speculative” real estate properties (I assume they are referring to rental properties) now require a 20% down payment
In short, these changes should not impact the rea estate market very much. Banks are currently using the 3 year fixed rate (3.59%) to qualify variable clients so moving that to the 5 year fixed (3.89%) is not a big deal. Second the refinance revision is of no interest to Realtors or the resale real estate market. Third but certainly not least, 20% down payment now required for “speculative” properties. The truth is cmhc’s premiums on rental properties were extremely unattractive and more times than not an investor would voluntarily put 20% down anyways.
iPro Realty Ltd. Brokerage