As of June 1st 2021, The mortgage qualifying rate has gone up from 4.79% to 5.25% or 2% above the contract rate, which ever of the two is higher.
What this means for the average Canadian is that borrowers can now qualify for approximately 4 to 5% less on their mortgage. Reducing the buying power of purchasers over the years by stacking mortgage rules one on top of the other is creating a situation whereby the average Canadian is finding it more and more difficult to become a homeowner. On last week’s show, we covered this subject in more detail and our listeners echoed our concern regarding this subject. In an attempt to try and cool down the real estate market, the government has not been able to achieve this goal through it’s multiple tweaking of the mortgage rules.
As immigration starts up again, and we increase the number of buyers to the existing pool of shoppers, the lack of inventory of single-family homes will continue to become more and more of a problem.
With rates being this low, inventory being scarce for single-family homes, and an increasing difficulty to qualify for a mortgage, this booming real estate market is set to continue for at least another year or two.
As a buyer, what can you do in order to still qualify for the mortgage of your dream home with all these obstacles in the way?
Many young couples are choosing to ask their parents or grandparents for help with their down payment, some are adding a cosigner to their file, and some are changing the type of property they originally intended on buying and are choosing to move into a different type of home, a different location, or a smaller property.
Having the right guidance from a team of professionals is key during your homebuying process. Be sure to be surrounded with a realtor representing you as a buyer, be equipped with a preapproval in hand before making any offers, and have the right legal advice regarding what conditions you are ok to remove from a pending offer.
As always, North East is always here to help if you need any home buying advice. Listen to The Real Estate Show or Contact us today.