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askgauge.ca | Home Buying Made Simple

The Mortgage Stress Test

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If you are looking to buy a new home or trying to renew your mortgage, the new stress test (Mortgage Stress Test) might stress you out but no worries we got you covered!  We are going to be covering how the regulatory changes will affect the bottom line of the homebuyers and homeowners looking to renew their mortgage.

The Canadian banking regulator, the (OSFI) have introduced another stress test on top of existing stress test starting January 2018.  The regulators have argued that there are valid reasons for these stress test (old or new).

    1. Household prices have increased dramatically
    2. Household debt has continued to rise compared to household income
    3. Canadians have accumulated the highest household debt burden of any G7 Country

Regardless of the reasons, for now, the old stress test and new stress test is here to stay.  We met and interviewed Mohit, a mortgage professional who works with his clients to build the right residential and commercial mortgage solutions.  

  1. What is the previous stress test and what are the changes to the stress test?  
  2. How does this impact the homebuyers and homeowners?  
  3. How does this stress test affect affordability and why?
  4. How does this new regulation affect clients who are trying to renew an existing mortgage or who have a variable rate and wants to switch to a fixed rate?
  5. As per my understanding,  the previous stress test impacted mostly the first time home buyers, however, does this new regulations impact buyers who are looking to upgrade to a new home?
  6. How does this impact the prices of homes? If the home prices drop, is it not good news for home buyers looking for homes in the Toronto real estate market?
  7. Does this new rule apply to all type of lenders? Which lenders do you see benefiting from this mostly?
  8. Do you foresee that mortgage interests rates going up? If so, is it for variable or fixed rates?
  9. Would this result in the hard to switch option of a new lender with better interest rates? In other words, shopping for better mortgage rates got a whole lot tougher?  
  10. How do you help clients who are looking for homes for sale or someone who is looking to renew their mortgage?
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