An update on the new rules set out now for people putting 20% or more as a down payment. Read on what OFSI (Office of the Superintendent of Financial Institutions) is now going to put in place for people looking for a a conventional mortgage. This is for either purchases of 20% down payment or more or people looking to refinance their exisiting mortgage under 80% loan to value.
OFSI is trying explain the reasoning here because even those home buyers who don’t need mortgage insurance because they have a 20% down payment will now need to show they can make the minimun payment if the interest rates rise above the five-year benchmark rate published by the Bank of Canada or 2% higher than their contracted mortgage rate, whichever is higher.
This, right now, will harm the chances for a lot of first time home buyers who had the 20% or more down to now qualify based on the new rules even if they are no in need of mortgage insurance. This will take away a lot of choice for mortgage options for clients put in this situation. The rules are favoring more the banks then the mono lenders where a lot of lower cost mortgages are available through the mortgage broker channels and a lot of buyers go to get better rates then what the banks were offering to the clients.
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