Upcoming Changes to Mortgage Stress Tests!
Effective June 1st, both insured and uninsured mortgage borrowers will be subject to a stricter stress test when qualifying for their mortgage.
Borrowers will now need to prove they can afford payments based on the higher of the contract rate plus 2%, or a new floor rate of 5.25%, up from the current 4.79%.
It is expected that these new rules will cut buying power approximately 4%-4.5%. In simpler terms, if you qualified for a $350,000 mortgage before, under the new rules that would be modified to $332,500.
These changes are both good news and bad news for buyers. It will reduce the amount buyers can borrow, but it will also reduce the number of buyers, thereby reducing price pressure in some cases.
Let me know anytime if you have any questions or if you would like to be referred to a mortgage specialist!
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