Members of the Mortgage Professionals Canada met with members of Parliament recently in order to discuss housing affordability, and to outline concerns about the government’s changes to mortgage qualification rules that were introduced last quarter. These conversations were in hopes of getting the government to reduce the stress test number.
Currently, when someone who is getting an insured mortgage (meaning you put less than 20% downpayment) they are having to qualify at the Bank of Canada interest rate currently at 4.64%. However, the mortgage they would realistically be getting will likely be around 2.5% – 2.75% in the current setting.
Paul Taylor, president of Mortgage Professionals Canada has indicated that this could be about a “20% reduction in purchasing power” for the average home buyers.
They have provided the following example for a an average Canadian household with income of $80,000 annually (average Canadian income in 2015).
- Interest rate = 2.5%: Buyers would qualify to borrow approximately $400,000
- Interest rate = 4.64%: Buyers would qualify to borrow approximately $320,000
In their release, they indicate the stress test is a good idea but that the rate should be reduced.
With a lower qualifying rate, and average home prices on the rise, and record low inventory levels, you can see how the average Guelph home buyer may have some difficulty getting into a detached home anytime in the near future.
Although, it may seem like the odds are against you – there is hope! Get the right team together (Realtor, Mortgage professional, etc.) and they will help you set up a plan to help you turn your dreams into an address! Give me a call today to get your plan in motion.
You can read the release & reaction of Mortgage professionals here: