{"id":5765,"date":"2021-07-27T10:35:28","date_gmt":"2021-07-27T17:35:28","guid":{"rendered":"https:\/\/wiibid.com\/?p=5765"},"modified":"2021-07-27T10:35:28","modified_gmt":"2021-07-27T17:35:28","slug":"new-mortgage-stress-test-rate-brings-more-stress-to-homebuyers","status":"publish","type":"post","link":"https:\/\/wiibid.com\/?p=5765","title":{"rendered":"New Mortgage Stress Test Rate Brings More Stress To Homebuyers"},"content":{"rendered":"
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While the Canadian housing market has been kind to sellers, homebuyers have had to deal with a series of costly hurdles in Canada\u2019s ongoing and eventful housing market full of supply shortages, growing and pent-up demand, red hot prices, and bidding wars.<\/p>\n

And now, the federal government is effectively adding another significant hurdle on the path to home ownership. Back in May, the Office of the Superintendent of Financial Institutions (OSFI) and the federal government raised the mortgage \u201cstress test\u201d bar<\/a> for those applying for a mortgage in Canada. It was intended to slow down the overheated housing market and to prepare for the inflation and rise of interest rates that are on the horizon. This results in many buyers, especially first-time buyers, having to wait to see how much they can borrow reduced by about 5%<\/p>\n

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Here\u2019s what you need to know:<\/a><\/p>\n

The stress test rate isn\u2019t the rate you actually pay. At 5.25%, it\u2019s higher than currently posted bank rates. Even if you qualify for a mortgage at current rates in the 2% ballpark, buyers will need to prove to the bank that they can afford their monthly payments at the 5.25% rate. This new rate applies to both insured and uninsured mortgages.<\/p>\n

With the new federal rule changes, the new 5.25% stress test threshold now means buyers will also see the maximum amount they can borrow reduced by about 5%. That\u2019s a drop of about $30,000 when you are shopping for a $600,000 home, meaning that buyers will either need to save up more or find a cheaper home.<\/p>\n

Many of Canada\u2019s homebuyers and first-time buyers will have a tougher time qualifying to buy the home they want. To help them prepare, homebuyers might want to start to consider a few things:<\/p>\n