According to CREA's latest news update, the federal government is preparing to cast a wider net on uninsured mortgages.

Effective Jan. 1, 2018, Guideline B-20 – Residential Mortgage Underwriting Practices and Procedures will require borrowers who have a down payment of 20 per cent or more to qualify for a mortgage at a higher rate. 

Prospective home buyers will have to be approved at either the five-year mortgage rate published by the Bank of Canada (currently 4.99 per cent), or the mortgage rate that their federally regulated financial institution offers—plus 2 per cent, whichever is higher. 

The one exception is . . .

If a borrower has put down a deposit and received a mortgage eligibility assessment or pre-approval from a federally regulated lender prior to Jan. 1, 2018. In this case, the lender has the discretion to offer the loan based on the pre-existing guideline (including the prior qualification rate).

Against this backdrop . . .

CREA is encouraging REALTORS^® to remind their clients who have put down a deposit on a home, but don’t need a mortgage for some time, or are uncertain about access to mortgage financing because of the revisions to Guideline B-20, to contact their federally regulated lender.

To learn more and ask questions, please contact CREA’s government relations group.