RBC Economics Research -Federal government announces new housing measures. October 2016 - Greater Vancouver Real Estate News

Uniform rules for all insured mortgages

Starting on October 17, 2016, all new mortgage borrowers with a down payment of less

than 20% and seeking mortgage insurance (high-ratio mortgages) will be required to

qualify at the posted rate for a conventional mortgage for a five-year term (presently

4.64%) or the contract rate, whichever is higher. Currently, this qualifying requirement

is imposed only on insured mortgages with a variable rate or a fixed rate with a term of

less than five years. Moreover, effective November 30, 2016, the standards for low-ratio

mortgage portfolio insurance will be same as those for insured high-ratio mortgages.

This means that mortgages in a portfolio to be insured will be restricted to 25 year in

length of amortization, a maximum of $1,000,000 in value, a credit score of 600 or

higher, and a maximum Gross Debt Service of 39% and Total Debt Service of 44%

calculated with the posted rate for a five-year conventional rate or the contract rate,

which ever is higher.


Link to the full report

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