These new measures are to help cool off the hot housing markets in areas in Canada. Unfortunately first time home buyers will feel the most impact from this change. For example, if someone qualified for a $350k mortgage prior to the change, they now will qualify for a $280k mortgage. It will affect buyers overall purchase power by approx. 20-25%. This is going to continue to impact buyers over at least the next six months as buyers adjust their expectations about what home they are able to buy. After this adjustment period the market will pick up again just like in past years.

The other aspect is that buyers with a deposit of at least 5% but less than 20% must be backed by mortgage insurance. This protects the lender in the event the home buyer defaults on a high rated mortgage. This can get complicated as it affects lenders and can impact interest rates which are then passed down to the buyer. 

These changes will also make it a lot harder for first time home buyers to purchase a home. There has already been an increase in the amount of first time home buyers that require their parents to co-sign on their mortgage or need to provide support with a large down payment. 

It is so important for our children to be educated at a young age so that they are prepared for when it comes time to buy their first home. Otherwise we will see an increase in the age that children are still living at home, maybe even into their 30’s!! Make sure that you talk to Your Mortgage Now about the ways that you can help you or your children when the time comes to purchase  a home.

That is why Devin and Wes from Your Mortgage Now are informed and want to ensure as a buyer that you understand the way your mortgage approval will work with the new changes implemented by the Federal Government.