HOW THE STRESS TEST IS AFFECTING HOME BUYERS

In January of 2018, the federal government implemented a financial stress test which prospective home buyers must pass in order to qualify for a mortgage from a federally regulated institution. This test includes a calculation which will prove whether or not a homebuyer would be able to manage their payments if interest rates were to go up. The two main reasonings for the new test: to stop Canadians from buying more than they can afford and to protect lenders against default.

Since the new stress test was put into place, it seems as though many buyers are not qualifying for mortgages from the banks, or they are having to settle for a less expensive home. The average price of a home in Canada is currently $491,000 - which is a 10% decline from last March.

Young home buyers are the ones who are experiencing the hardest hit. Many prospective young buyers are also now holding off on purchasing a new home, so as to avoid disappointment. In order to pay your way around this new stress test, one of the best choices would be to see me! The financial stress test ONLY applies to federally regulated lenders (the banks). Therefore, if you consult with me, I will provide you with credit unions and alternative lender options that are not federally regulated, meaning they will not impose the financial stress test.

If you would like to get more information on the financial stress test or would like to explore your options with lenders that are not federally regulated, give me a call today for a free consultation. Let's help you get that dream home!