TORONTO – New federal rules that will cut into the purchasing power of some first-time homebuyers take effect today.
The rules involve a stress test for all insured mortgage applications to ensure the borrower can still service their loan in the event interest rates rise or their personal financial situation changes.
Until now, stress tests were not required for fixed-rate mortgages longer than five years.
READ MORE: Feds to close tax loophole for foreign home buyers
The federal government is making the change to try to stabilize the country’s housing markets, particularly in cities such as Toronto and Vancouver where prices have gone through the roof.
Canadian mortgage brokers reported a flurry of borrowing last week as homebuyers tried to get in under the wire.
READ MORE: New mortgage rules to have minimal effect on rental market, experts say
Toronto-based broker Matthew McKillen estimated that he was 30 to 40 per cent busier this week than during a normal week.
Watch below: First-time home buyers will likely be looking at cheaper homes now that the Trudeau government’s new mortgage rules have taken effect. The new rules mean potential buyers will need to go through a stress test for insured mortgages. Quinn Ohler has more on what it means for Edmonton.
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