Covid 19

New Morgage Rules

New Morgage Rules

Chestnut Park Logo Muskoka










Our friends at Hanley Mortgage Group have provided us with a handy breakdown of the changes. Darlene Hanley has noted the following detailed, yet simple explanations of the implications of the new mortgage rules.

Client Cheat Sheet: Mortgage Need to Knows

News and Information You Can Use

New Rule Changes – January 1st, 2018

  • On January 1st, 2018, OSFI implemented new conventional (uninsured) mortgage rules, attempting to protect homebuyers from mortgage default in a rising interest rate environment.
  • The government introduced a rate cushion which will affect all uninsured mortgages (those with a down payment of 20% and all refinances). They must now qualify at the greater of:
    –The Bank of Canada posted rate (5.14%)


    –Their contract rate + 2% (This means, if your rate is 3.39%, you would be qualifying at 5.39%)
  • This results in approximately a 20% decrease in purchasing power

    Example: *A couple (or an individual) who has a combined income of $150,000*
    Maximum Purchase Price:

      1. –Before the Stress Test: $1,050,000
      1. –After the Stress Test: $840,000
      –Difference of: $210,000

    Bank of Canada Rate Increase

  • On January 17th, 2018, the Bank of Canada increased its overnight lending rate to 1.25% from 1%.
  • The major 6 banks have followed their lead and increased their prime rate. Each lender decides what their prime rate will be. (For example, Scotiabank’s is 3.45% but TD Bank is 3.60%)
  • Changes in Prime influence variable interest rates and lines of credit.
  • Insured Mortgages
  • Properties under 1 Million, with less than 20% down payment
  • Insured by one of three insurers in Canada
  • Minimum down payment is 5% on the first $500,000 and 10% on the difference up to $999,999
  • Borrower has to be qualified at the Bank of Canada posted rate (5.14%) even if their contract rate is lower

This entry was posted on February 15, 2018 by Jim and Iris

Recent Posts


Muskoka’s Winter Fun




Muskoka Cottage Market Watch


Muskoka Olive Oil Company

Like Us on Facebook

Words of Appreciation

Translate »