LeCanadian

Top Menu

  • Login
  • Archives
  • Les Actualités
  • Advertising
  • Sexy Pages
  • Contact Us

Main Menu

  • Home
  • Business
  • Entertainment
  • Foodie
  • Headline
  • Health
  • Editorials
  • Lifestyle
  • Sports
  • UFO · Exopolitics
  • City
  • Sexuality
  • Dating
  • Login
  • Archives
  • Les Actualités
  • Advertising
  • Sexy Pages
  • Contact Us

logo

Header Banner

LeCanadian

  • Home
  • Business
  • Entertainment
  • Foodie
  • Headline
  • Health
  • Editorials
  • Lifestyle
  • Sports
  • UFO · Exopolitics
  • City
  • Sexuality
  • Dating
  • Comment gérer un retard de vol ?

  • 5 ways sudoku boosts brain health

  • 10 tips to successfully market your law firm

  • 7 Amazing Gifts for Kids Who Like to Cook

  • Make Mortgage Overpayments Work for You

Business
Home›Business›New Lending Rules Will Have Impact on first-time Buyers

New Lending Rules Will Have Impact on first-time Buyers

By admin
October 10, 2016
1882
0
Share:

Canada’s first-time home buyers may have to shelve their dream house fantasies due to lending changes announced last week by the federal government, mortgage brokers say.

Ottawa moved last week week to tighten mortgage lending rules that will limit the amount many Canadians can borrow to help ensure that when interest rates rise, they’ll still be able to make their payments.

Mortgage broker Frank Napolitano says that means the size of mortgage many buyers will be able to qualify for will be less once the rules take effect on Oct. 17.

“First-time homebuyers will probably have to probably scale down the type of home that they may have planned to buy,” said Napolitano, managing partner at Mortgage Brokers Ottawa.

Under the new rules, a stress test that had only applied to borrowers who opted for variable rate mortgages or fixed rate mortgages with terms less than five years will now be used for all home buyers with less than a 20 per cent down payment.

That means borrowers must be able to qualify for their mortgage using a higher interest rate than they will actually be paying on their mortgage.

The advertised special offer rates for a five-year fixed rate mortgage at Canada’s big banks are around 2.5 per cent. However, the Bank of Canada-posted rate used in the stress test is 4.64 per cent based on the posted rate at the big banks.

“You’re not paying more, but you’re going to be able to buy less house,” Napolitano said.

The idea is that potential home buyers must be able to show that if interest rates were much higher than they are today, they’d still be able to make their mortgage payments and other costs related to home ownership.

Napolitano used an example of a Canadian earning $70,000 a year with enough saved for a 5 per cent down payment, and carrying $500 a month in non-mortgage monthly debt payments such as a car loan.

Based on a five-year fixed-rate mortgage of 2.44 per cent, he estimated they could qualify for a loan that would allow them to buy a house worth about $370,000 under the old rules.

However, under the new stress test using 4.64 per cent, Napolitano estimated that same home buyer could only afford to buy a home worth about $280,000.

Jason Scott, a broker with the Mortgage Group in Edmonton, says many of his clients would not have qualified for their mortgages under the more stringent rules.

He noted that it isn’t uncommon for nervous lenders to turn down borrowers who just barely qualify or require a co-signer or a larger down payment.

“People who have less than 20 per cent down are going to qualify for a whole lot less money,” Scott said.

Napolitano said for some buyers, the changes may mean that they will have to settle for a less expensive property, save for a larger down payment or wait until they are earning more in the future.

“I think it’s going to take some people out of the market,” he said.

“There’s no question that some young Canadians that had aspired to buy a home, may have been ready to buy the home this year, but now I think they may have to wait.”

Read More..

Post Views: 2,029
Previous Article

Arch Support and Self Esteem Go Hand-in-Hand

Next Article

No Break, But no Deal as Fiat-Chrysler ...

0
Shares
  • 0
  • +
  • 0
  • 0
  • 0
  • 0

Related articles More from author

  • Business

    Starbucks sells Tazo tea brand

    November 6, 2017
    By admin
  • Business

    Sobeys Withdraws Appeal of Discrimination Decision as Company Faces Boycotts

    August 28, 2016
    By admin
  • Business

    Digg-like Website Now Paying Users $500.00 « The Canadian Headlines Newspaper

    October 20, 2015
    By admin
  • Business

    CMHC Sees no 1980s Style Housing Bubble in Toronto high-rise Condo Market

    July 19, 2016
    By admin
  • Business

    H&M May Cut Prices After Weak September Sales

    October 1, 2016
    By admin
  • Business

    Hudson’s Bay Learns From ‘practical’ Europeans

    September 8, 2016
    By admin

Featured Petition

  • Bell Baker’s John Summers – Stop a Crime Against Humanity – What would his Mother think?
  • John E Summers: Ottawa Lawyer Attacks Motherhood and Civil Rights – Support His Disbarment
  • Stop Ottawa Lawyer John Summers’, Marcella Carby-Samuels’ & David Tenenbaum’s Ab
  • Week
  • Month

Week

Sorry. No data so far.

Month

Sorry. No data so far.

Popular on The Le Canadian

  1. AgoraCosmopolitan
  2. Agora Publishing Consortium
  3. Le Journal Canadien
  4. Dominion: Food News
  5. LeCanadian.com
  6. The Ottawa Star
  7. Capitalistocracy.com
  8. Agora Books Author House
  9. First Nations Press
  10. The Etiquette Show
  11. Ontario People's Front





Mark's



Recent Posts

  • Comment gérer un retard de vol ?
  • 5 ways sudoku boosts brain health
  • 10 tips to successfully market your law firm
  • 7 Amazing Gifts for Kids Who Like to Cook
  • Make Mortgage Overpayments Work for You
  • Son shares warning for immunocompromised after fully-vaccinated Tampa Bay dad dies from COVID-19
  • Catching Covid-19 after being vaccinated isn’t a myth. It happened to me
  • My COVID Story: “I got COVID after being fully vaccinated”
  • Albertans fully vaccinated for COVID-19 urged to stay cautious during pandemic’s 4th wave
  • I got the vaccine – and then I got Covid: Readers share their stories

Most Viewed Posts

No Posts found

Visitors

  • Home
  • Business
  • Entertainment
  • Foodie
  • Headline
  • Health
  • Editorials
  • Lifestyle
  • Sports
  • UFO · Exopolitics
  • City
  • Sexuality
  • Dating