It is already tough to qualify for a mortgage these days, but things just got even tougher! Starting on October 17th, 2016, home buyers with less than 20% down will have to qualify for a mortgage based on Canada benchmark rate or 4.64%.
Qualifying at benchmark rate has been the rule for mortgage applications for variable rate and terms under 5 yrs. On October 17th, the same rule will now apply to 5 yr fixed rate which could be anywhere between 2.29 to 2.49% depending on the lender.
This will significantly reduce the mortgage amount and in turn affect the purchase price. This rule will force a lot of homebuyers to look at homes costing significantly less than they were planning to purchase and in turn apply downward pressure on home values.
Here is the link to the official Department of Finance announcement.