The Office of the Superintendent of Financial Institutions (OSFI) recently launched tougher mortgage policy to stabilize the housing market. Don’t be surprise if the change will have a negative impact on the housing market, forcing prices downwards because most home buyers will not be to able qualify under the Stress-test of conventional mortgages. Likewise as of January 1st, people taking out uninsured mortgages have to qualify at the best rate offered by the bank, plus two percent. For people planning to sell their homes next year, expect a severe price correction perhaps a 5-20% price drop. If your are a First-time home buyer with less than 20% for a high ratio mortgage, you need to consider a pre-approval as you would need to be approved at the five-year benchmark rate published by the Bank of Canada, which is currently at 4.99% and 25 years amortization. For buyers with a healthy down-payment of 20% or more for a Conventional mortgage, it would be prudent to buy before January 1, 2018 because you would have to qualify at the banks best rate plus 2%. Meaning that if you were approved this year for $380k, next year you could only be approved for $325k.
Unless you have money to buy the property outright, you can delay purchasing a property till summer of next year to take advantage of the price drop. The Private lenders will the biggest winners in this..
