(October 17, 2017
, posted in Mortgages )
Our favourite mortgage lender, Sharon Davis at BlueTree Mortgages WEST
, has sent information on the new guidelines from the OFSI (Office of the Superintendent of Financial Institutions) for residential mortgage underwriting today. Here it is:
The highly talked about Stress test is passed – will be the greater of the benchmark (currently 4.89%) or contract rate plus 2.00% to qualify for borrowers with 20% or more skin in the game. It used to be harder to qualify for a variable rate mortgage… as of January 1 – it looks to be the smoothest best way to qualify now!
No more bundles – in the alternate space some lenders would do a 1st /2nd type of mortgage to achieve a higher loan to value. Many alternate lenders will only go 65-75% loan to value (LTV) and if buyers needed more – they would “bundle” with another lender to achieve the higher amount. No longer
And there is a 3rd new rule – which we are awaiting further clarification on… this speaks to lenders having to enhance their LTV measurement and limits according to risk. I think it means that in markets where huge appreciation or opposite has taken place – lenders may be asked to insert their own overriding thresholds with respect to LTV. NEED more clarification for sure… once it comes – I’ll share that too.
These new rules just dropped borrowing power by as much as 20-25%. It is ever more important to ensure your buyers are PRE-QUALIFIED. And for those downsizing – they may assume since their payments will ideally drop they qualify – but do they? I’ve had more than a few clients NOT – and have to pay huge penalties and charges to do what they thought would be better. Make sure your clients are confident in their moves – so you can be too.