You may have read the headlines already regarding OFSI’s announcement confirming the new tougher underwriting rules and guidelines that will come into play effective January 1, 2018. These new regulations, known as the B-20 guidelines, will make it tougher for Canadians to qualify for uninsured loans affecting consumers with down payments of 20% or more.
The biggest change and impact announced will be felt in the qualification of conventional business which will now have to be qualified at the GREATER of Canada's Benchmark rate (currently 4.89%) or contract rate + 2% as of January 1st 2018.
What You Need to Know
- Buyers and Potential Buyers with 20% or more down payment need to be aware that they may have a reduced buying power or may not quaify if they do not find a property before the end of the year.
- Current homeowners looking to access equity (renovations, down payment for investment property, debt consolidation as examples) may not qualify come the new year.
- These new rules currently only apply to federally regulated banks and trust companies. Mortgage Brokers we only have access to several banks and trust companies but also many different lenders that are not affected by these mortgage underwriting rules - like credit unions, Mortgage Investment Corps and Alternative Lenders. In other words - if the bank says no there are still options to help your clients.