On November 30, 2016 the Federal Government implemented their last set of mortgage underwriting changes. The purpose for the changes was to make borrowing more difficult and to slow down real estate investment in Canada. These changes may have had a greater impact than what the Federal Government had intended and there could be revisions coming later this year.
The biggest change is that for any insured mortgages regardless of their loan to value – LTV – the mortgage application must be approved using the Mortgage Qualification Rate (MQR) which is currently 4.64% and a 25 yr amortization.
The second big change is that no refinances can be insured and no rentals can be insured through the bulk insurance program, creating a price increase for refinances and for rental properties applications.
All o
f these changes have resulted in a multi rate marketplace. i.e. the rates available for an owner occupied 5% down are the best rates, with refinances and rentals being the worst rates. It is now standard for many lenders to charge a rate premium for any amortizations that exceed 25 years.
f these changes have resulted in a multi rate marketplace. i.e. the rates available for an owner occupied 5% down are the best rates, with refinances and rentals being the worst rates. It is now standard for many lenders to charge a rate premium for any amortizations that exceed 25 years.