The federal government recently unveiled plans effective October 17, 2016 that would require all insured borrowers to qualify for mortgage loans based on the posted rate for a five-year rate mortgage, which is now 4.64 per cent. Previously, consumers with locked-in rates for five years or greater have been able to use the rate on their contract to qualify for a larger mortgage loan. One question that has many asking, what if you want to transfer your mortgage to another bank? Do you the same rules apply? Are your options now limited to shop around for a better rate at renewal time? It seems the new mortgage changes implemented by Ottawa are not very clear in this regard.

In fact some of the largest mortgage default insurance providers are warning that about one third of mortgage borrowers may have trouble meeting the new debt service ratios introduced by Ottawa last Monday, which may ultimately result in having to downsize their current housing to meet the new lending requirements.

Experts believe the measures being taken by Ottawa should help to reduce the risk of a housing market correction in the Greater Toronto Area and a safeguard to ensure Canadians don’t take on more “house” than they can afford, where mortgages are concerned. The result is that many potential buyers may not qualify for home purchases, given the inflated pricing we currently have in the hot GTA market and a market correction being not so imminent at this time.