New Mortgage Rules Coming January 2018
The government of Canada will be introducing new mortgage rules January 2018. The rules change the minimum qualifying rate for mortgages to the greater of the Bank of Canada’s five-year benchmark rate or the contractual mortgage rate plus 2%.
If you already have a mortgage your renewal is NOT affected but here is the kicker – if you try to refinance you ARE affected. This basically means your current bank can hold you hostage. If when your term is up, you want to shop around your mortgage for a better rate you MUST qualify at a 2% higher rate. Most people are going to be stuck staying with their current bank so they do not have to re-qualify under the stricter new rules. Do you think banks are going to offer you competitive rates if you are in this group? NOPE. #YouAreScrewed
There is a good chance bond rates will rise in the New Year and the likely 5 year rates will be around 4.5% to 5% which means you will have to qualify at 6.5% to 7%!
If the new rules will affect you, you should be running to your bank to refinance NOW and/or get pre-qualified before January 1st.
Lake Okanagan Realty Ltd.
Tel: (250) 870-2792