Interest Rate Hike in Canada

4 Replies

Did you know....As of Jan 1st - the Gov't has forced on ALL lenders/banks in Canada - when approving a Borrower, they must pass a stress test at a Higher Int Rate (2% higher than approved) before getting the $$. Essentially means - the amount you can borrow will drop 15-19%. Another way the Gov't is trying to control our Economy and housing...Socializing Business! ;(

I'm expecting a short term drop in prices at the beginning of 2018..


Also, the $40 Billion housing project will definitely have pressure on prices

It’s been happening already with high ratio loans. Also won’t drop as much as you think, as most people are limited by their DP, not the level of debt they can service.  I never had any issues getting the high ratio insured clients funds when the stresss test was introduced a yr ago. Although their purchases are usually lower, so yes, we should see an impact, but I think it will be more due to uncertainty and not actually being denied. 

Originally posted by @Brent Byers :

Did you know....As of Jan 1st - the Gov't has forced on ALL lenders/banks in Canada - when approving a Borrower, they must pass a stress test at a Higher Int Rate (2% higher than approved) before getting the $$. Essentially means - the amount you can borrow will drop 15-19%. Another way the Gov't is trying to control our Economy and housing...Socializing Business! ;(

Brent:

That's not quite accurate.   Those placing residential mortgages will have to qualify for financing at the BoC posted rate for a 5-year fixed mortgage, @25yr amortization, regardless of the financing they ultimately plan to take.   Those with insured financing have been subjected to this qualification requirement for a couple of years now.    Those of who had mortgages before the "easing" of financing requirements in early 2000s will find the new qualification requirements familiar.

As I'm looking to get into my first piece of property this definitely hinders my situation. The new terms of borrowing money could mean the difference of being able to buy a detached home or settling with a townhouse/condo.

@Jordan Han I'm hoping to see those prices drop. I guess we just have to wait and see.

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