New mortgage stress test in Around Town
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Starting June 1, Canadian homebuyers will face tougher mortgage stress test rules that will decrease the buying power of most borrowers. The new stress test increased the previous 4.79 per cent qualifing rate to 5.25 percent.
The move to implement tougher stress tests will reduce borrowers’ theoretical buying power by a little over four per cent. As an example, an annual income of $100,000 with 20 per cent down payment and five-year fixed mortgage rate of 1.78 per cent amortized over 30 years would qualify for a home valued at $618,000 vs before June 1 at $651,000, according to ratehub.ca.
While the new mortgage rules could slightly dull the market, experts agree it likely won’t significantly cool conditions. Once the pandemic eases, an increase in immigration will likely further fuel demand, putting added pressure on the market.
Source: Global News Report June 1
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