BREAKING: Insured and Uninsured Mortgage - Stress Test Changing

[TimLacroix]

This afternoon, at approximately 1pm, the Office of the Superintendent of Financial Institutions announced the result of its consultation regarding the uninsured mortgage stress test found in B20. As of June 1st, uninsured mortgages must qualify at the greater of a 5.25% (up from 4.79%) interest rate or the contract rate plus 2%. You can read the formal announcement HERE.

If you have questions or want to understand the impact to your specific situation, please PM.

[JohnnyHockey13]

Wow, what do you think the effect will be on the Calgary market?

[riander5]

Tank the housing market!

[JRSC00LUDE]

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Wow, what do you think the effect will be on the Calgary market?

The uninsured mortgage customer is the least of the worries when it comes to potential for default I would think. It's the people scraping by the approval process with min. down and ultra low rates that will tank the market the worst should things change relatively drastically. Unless I don't understand these things at all of course.

[suntan]

Don't worry, CMHC has all that covered. No problem at all.

[Disoblige]

I honestly don't really get it myself either regarding uninsured vs. insured and the rules made against that.

I'll just put my tin foil hat on and say it's some sort of socialist BULLSHIT.

[adam c]

Yup screw the rest of Canada because of Toronto and Vancouver markets

problem is the people buying and driving up the markets in those regions aren’t impacted by this change but people trying to get into the market or retain home value are those that are affected

[Buster]

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Yup screw the rest of Canada because of Toronto and Vancouver markets

problem is the people buying and driving up the markets in those regions aren’t impacted by this change but people trying to get into the market or retain home value are those that are affected

reducing the cost of housing is a net benefit to a population

[ExtraSlow]

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reducing the cost of housing is a net benefit to a population

Bring the luxury tax!!

[adam c]

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reducing the cost of housing is a net benefit to a population

But if you keep increasing the qualification requirements then people still can’t afford until the market crashes

[Buster]

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But if you keep increasing the qualification requirements then people still can’t afford until the market crashes

The market crashes until people can afford it

[ercchry]

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The uninsured mortgage customer is the least of the worries when it comes to potential for default I would think. It's the people scraping by the approval process with min. down and ultra low rates that will tank the market the worst should things change relatively drastically. Unless I don't understand these things at all of course.

You’d think... but uninsured is the entire alternative industry... guess I’m working OT next week

[JfuckinC]

So should I sell my house now and move into my moms basement now?!

[arcticcat522]

Now's a great time to buy.....or sell....

[JohnnyHockey13]

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Now's a great time to buy.....or sell....

Len T Wong commercials...now I have to go back over time to see if he actually changes the last word between the two depending on the market ROFL

I think it's hilarious that for a while he would say "house sold in 90 days or we MAY buy it", awkwardly emphasizing the word "may".

[Rocket1k78]

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The uninsured mortgage customer is the least of the worries when it comes to potential for default I would think. It's the people scraping by the approval process with min. down and ultra low rates that will tank the market the worst should things change relatively drastically. Unless I don't understand these things at all of course.

Yeah i dont get it either, You would think the bigger concern would be the guy as you said just scraping by with min down and low rates. I dont doubt there are many people with money in the bank that are just as irresponsible but being able to put 20% down is no joke and takes some financial responsibility.

[ercchry]

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Yeah i dont get it either, You would think the bigger concern would be the guy as you said just scraping by with min down and low rates. I dont doubt there are many people with money in the bank that are just as irresponsible but being able to put 20% down is no joke and takes some financial responsibility.

The issue is there are properties that have increase over 50% in less than a year, owned by people with credit scores under 500... who are refinancing back up to 80%, a correction puts these under water, and a rate hike doesn’t even matter since once they blow that cash they probably can’t pay anyways... unless they can refi again, which they’ve done every year or two for a decade or so

[dirtsniffer]

I mean, there isn't any risk for the mortgage company if an insured mortgage defaults, right? Except to the insurance provider who have their own stress tests.

[Buster]

Everybody should realize that it is really dumb for us to have so much of our economic activity tied up with RE. But how do you unwind the bubble without a crash? The only way is to do it slowly. Changing the mortgage rules so that it is harder to qualify is one strategy. I presume they are hoping it deflates the market across all price levels. If you also start to move the mortgage market over time so it can take more stress, then you can also introduce more stress (raise rates, normalize values with income, etc) without being catastrophic.

[JRSC00LUDE]

All I think is there isn't much point in wasting your capital on a 20% down payment right now. Keep the cash, pay the extortion insurance, ??????, profit?