Was going to post this in my Mortgage Broker (CP power ring) thread, but the changes are quite significant so I wanted to post it here as well.
What a crazy day this has turned out to be. First off, my brokerage (Invis-Mortgage Intelligence) merges with Mortgage Alliance to become the largest full-service brokerage in Canada, and then this news:
http://www.theglobeandmail.com/news/...ticle32206297/
I'm going to stick to mainly the points more related to CP, as the other portion is to do with foreign ownership.
- All insured mortgages will now need to be qualified at the Bank of Canada benchmark rate, which is currently 4.64%. Previously, any fixed term 5 years or longer would be qualified at your actual contract rate, and only variable or fixed terms less than 5 years needed to use the benchmark rate. This will have major impacts on what people can qualify for.
- Bulk-insured/portfolio insured mortgages (>20%) down will require the same as the above. A lot of lenders do bulk-insure their mortgages even at >20% down, so this too will have a significant impact.
- Max amortization on any insured mortgages will be 25 years, even if >20% down.
This goes into effect October 17th, so if you're needing to utilize the current regulations, you will want to get your application in quickly.
Update:
There is still some uncertainty as to exactly how a 5-year fixed will be calculated, as it may not be the Bank of Canada benchmark rate. They may create a new benchmark rate just for fixed rates for qualifying. Otherwise, this would lead to a huge spike in variable rate mortgages, which they wouldn't want to see.
Also heard from a couple of my reps at the big banks that they will 'most likely' follow suit with the new regulations for >20% down, even though they don't bulk-insure.
Thoughts?