• Minh Ta

New Changes to Mortgage Rules in 2021



Canadian real estate prices have increased dramatically, with price increases of 25-30% in many of the top markets. Along with the spike comes ways to help control the real estate market. The Office of the Superintendent of Financial Institutions (OSFI) recently proposed raising the minimum qualifying rate for uninsured mortgages to 5.25%. The new changes will take in effect on June 1, 2021.


The new stress test is an increase of 46 basis points from its previous 4.79% benchmark rate used by the major banks. The new rule will impact buyers purchasing power by 4% to 5% as they will need to pass a tougher stress test to show lenders that their income can support a loan at the offered rate plus 2% or 5.25%, whichever is higher.


Here are some other new changes to the mortgage rules in 2021:


1. Homebuyer will need at least a credit score of 680 points, up from 600 points.


2. The maximum gross debt ratio (GDS) is limited to 35% (down from 39%) and the maximum total debt service ratio (TDS) is now 42% (down from 44%).


3. Borrowed funds will no longer count towards your down-payment


Real estate experts are saying these tougher stress test rules won't cool home prices. What do you think?

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