New Mortgage Rules Effective January 1st 2018

New guidelines that will soon place restrictions on uninsured borrowers looking to secure a mortgage have — as one Ottawa realtor puts it — kicked the pursuit of a home into "overdrive."

Earlier this month, the Office of the Superintendent of Financial Institutions (OSFI) released guidelines for the mortgage industry that will take effect on Jan. 1, 2018.
One of the major new rules is a requirement to subject uninsured borrowers to a "stress test." 

At the moment, anyone who puts down more than 20 per cent of the value of a home doesn't have to pay for mortgage insurance, and is considered an uninsured borrower.
Only insured borrowers — those who put down less than 20 per cent — are required to undergo a stress test of their finances, something they've faced since last year.
OSFI sets new mortgage rules, including stress test for uninsured borrowers

The test consists of ensuring the borrower would be able to pay back the loan if interest rates become higher than they are today. It was part of an attempt to rein in personal debt.
Under OSFI's new rules, people would have to show they can afford their mortgage payments at either the five-year average rate posted by the Bank of Canada, or two percentage points higher than whatever deal they were able to negotiate — whichever measurement is higher.

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