Mortgage Rules Changing

The Northern Real Estate Board is reporting a 14.6% increase in the number of units sold this past month compared to the same month a year ago. That represents a six-year high for sales in the month of November…
But change is in the wind for the industry.

Currently, there are two types of mortgages. An uninsured mortgage is one in which the borrower has 20% or more down on a mortgage. And then there are insured mortgages.

“An insured borrower, or an insured mortgage, is available to a client when they’re using less than 20% down, or the lender feels there’s a risk and there’s extra insurance to have that mortgage insured,” explains Bob Quinlan.

Those taking out an insured mortgage need to undertake a stress test. That involves the lender assessing whether the borrower can afford an interest rate of 4.99% and still make the payments. But, as of January 1st, that stress test will apply to everyone, insured and uninsured.