New Mortgage Rules

Since Monday (October 17th, 2016), new mortgage rules were implemented by the federal government and they will certainly affect the real estate market, particularly in Quebec.

New Mortgage Rules

The current context of mortgages, with historically low interest rates, promotes homeownership, especially for first time buyers. However, some buyers have to borrow the maximum to be able to access the property. In such a case, what will be their repayment ability when mortgage rates will be revised upwards?


You should know that the new measure is a response to the general indebtedness of Canadians and the anticipation of rising interest rates. This is actually to ensure that borrowers are able to repay their mortgage, even if interest rates vary in the future.


This new measure is for borrowers who do not have the liquidity to pay a minimum cashdown of 20%. In such a case, they will have to ensure their loan (CMHC or other). Thus, at the time of contracting an insured mortgage, the bankers will have to calculate the maximum loan based not on the promotional rate of their financial institution, but on the rate quoted by the Bank of Canada (for a 5 year loan now, it is about 4.64% versus 2.39%).


Since about half of Quebecers in general put less than 20% in cashdown (data from the Institut de la statistique du Québec), it is sure that the new measure will reduce the borrowing capacity of households. The question is how the impact will be felt on the resale market.


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