Under the newly revised stress test, home buyers in Canada’s largest markets will see their mortgage qualification prospects hit the most, according to a new analysis by Zoocasa.
Effective at the beginning of this month, the Office of the Superintendent of Financial Institutions raised the qualifying rate for borrowers who have at least a 20% down payment from 4.79% to 5.25%. For perspective, Zoocasa estimated that current fixed and variable mortgage rates are as low as 1.7% to 2% for a five-year term.
On average, Canadian would-be buyers looking at average-priced homes in the nation’s urban markets would have to endure a 3.8% decrease in affordability. Zoocasa calculated that the amount Canadians would qualify for under the new rules will likely be between $14,000 and $47,000 less.
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Assuming no additional debt, buyers with a 20% down payment and 30-year amortization will see the largest drop in their qualification in Greater Vancouver ($47,170 less), which had an average home price of approximately $1.211 million in April. This reduction will essentially compel them to supplement their income by $9,000 to qualify for the same mortgage under the new regime.
The next largest decline in qualification will be among buyers in Greater Toronto ($42,475 less), with an average home price of around $1.091 million and a requirement of $8,000 in additional income.
At the other end of the spectrum, the least affected will be buyers in Saskatoon ($13,661 less) and Winnipeg ($13,875 less), markets that offer average home prices of $347,616 and $353,377, respectively. Hopeful homeowners in both cities will need to augment their incomes by just $2,000 more to qualify for the same mortgages in the new environment.