New Mortgage Rules Canada – How Lending Rules Are Changing In 2018

New lending rules are coming to Canada in 2018 let's take a look at the changes, Coming up! Hey everyone Ivan Mamuzic here with Keller Williams Realty helping you buy, sell, and invest in real estate So before we take a look at the new rules let's take a look at the two types of borrowers we have in today's marketplace

First we have insured borrowers Insured borrowers put down less than 20% of their purchase and are required to purchase mortgage default insurance in order to protect the banks in case they're unable to meet their obligations Next we have uninsured borrowers These borrowers put down more than 20% and since they invested a high amount of equity the banks do not require them to purchase mortgage default insurance Now these are the same borrowers that are going to be affected by the new rules coming up

Now starting on January 1st 2018 these uninsured borrowers are going to lose about 20% of their purchasing power They will now have to prove that they can afford their mortgage payments at a rate that is 2% higher than the rate that is offered by their bank or at the five-year average rate posted by the Bank of Canada So for example if you can currently purchase a home that is $700,000 at an interest rate that is 299% starting on January 1st you'll have to qualify at 499% and your purchasing power will drop to $567,000 That's a difference of $133,000 Now since buyers will be losing a lot of purchasing power in the new year, look out for an increase in sales activity for the rest of 2017 as buyers look to lock in mortgages under the existing lending rules

Thanks for tuning in guys! If you have any questions about the new rules or about real estate in general, leave a comment below or message me on Facebook, and don't forget to hit the subscribe button for more Real Estate content!

Source: Youtube

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