We at Lotus Loans & Mortgages Corporation wanted to remind everyone that the proposal for the change in the Stress Test should come into effect on June 1st, 2021. This change is for conventional mortgages (non-insured mortgages) where Banks will use the higher rate of 5.25% to qualify mortgage approvals thereby reducing affordability by approximate 4-5%. The qualifying rate is currently 4.79%
We have been informed that for deals that have been committed with a mortgage approval before June 1st the old lower rate will apply but what is new is that it seems now that pre-approvals based on the current lower rate of 4.79% will NOT apply if there is no signed offer to purchase in place before June 1st.
For those buyers with pre-approvals, they should act quickly to pull the trigger on an actual offer unless they are OK with a slightly smaller mortgage approval.
The new stress test mortgage qualifying rate is still in the proposal stage but should be finalized next week. Stay tuned for our updates and know that we at Lotus Loans & Mortgages in Mississauga always strive to provide our customers with the latest mortgage news in this ever changing mortgage market.
