Monthly Archives: October 2017

“Stress Test”, what does this mean?

This week the Office of the Superintendent of Financial institutions Canada published the final version of Guideline B-20 – Residential Mortgage Underwriting Practices and Procedures. 

OSFI is setting a new minimum qualifying rate, or “stress test,” for uninsured mortgages.

  • Guideline B-20 now requires the minimum qualifying rate for uninsured mortgages to be the greater of the five-year benchmark rate published by the Bank of Canada or the contractual mortgage rate +2%.

OSFI is requiring lenders to enhance their loan-to-value (LTV) measurement and limits so they will be dynamic and responsive to risk.

  • Under the final Guideline, federally regulated financial institutions must establish and adhere to appropriate LTV ratio limits that are reflective of risk and are updated as housing markets and the economic environment evolve.

OSFI is placing restrictions on certain lending arrangements that are designed, or appear designed to circumvent LTV limits.

  • A federally regulated financial institution is prohibited from arranging with another lender a mortgage, or a combination of a mortgage and other lending products, in any form that circumvents the institution’s maximum LTV ratio or other limits in its residential mortgage underwriting policy, or any requirements established by law.

The Canadian government is concerned of the overall debt load of Canadians. The goal is to insure people are well prepared for the possible increase in interest rates. They are also trying to help Canadians  evaluate  their  overall household debt. This is a good for Canadians long term, and will help protect them. “These revisions to Guideline B-20 reinforce a strong and prudent regulatory regime for residential mortgage underwriting in Canada,” said Superintendent Jeremy Rudin.

With this latest change, there are things to keep in mind when understanding how this announcement can affect you. 

·         Mortgage renewals will not have to requalify under these new regulations, as long as all the terms are staying the same. If you want to change anything at all then you will need to requalify. 

·         If you are thinking of doing anything; buying, selling, refinancing – it is very important to get to your bank now. Time is of the essence.

·         First time home buyers with 20% down should jump now, otherwise this could limit them. 

·         If you have a fully qualified application in place before Dec 31st it will be honoured and you will be protected on your new application provided it funds within 120 days of the application and there are no material changes to your application. Due to the holidays we expect the banks to cut off applications by Dec 21, 2017

·         The best thing anyone can do right now is speak to a professional like The Rocca Sisters & Associates , and go to the bank and re evaluate your overall financial situation to see where and how your bank can help you. If you are not working with anyone our partners at CIBC  would be happy to talk to you at a time that is good for you.

 November and December are going to be a great time to get into the market. Prices have already reached a low. There is a lot of inventory and options for buyers, and sellers want to sell! The New Year and Spring market will be an interesting period of time. With the changes in interest rates and now the announcement of the “stress test”, the market will likely level off and regulate itself, it will be area specific. Putting things into perspective, we will be back to business as usual. 

Ref OTTAWA – October 17, 2017 – Office of the Superintendent of Financial Institutions Canada

The Rocca Sisters & Associates are award-winning Sales Representatives with Royal LePage Burloak Real Estate Services Ltd., Brokerage and are ranked number three in Canada for Royal LePage in 2015 for sales production and volume. They can be reached at 905-335-3042 or email To learn more about our team, our featured listings or our community giveback events, visit us at

New mortgage rule and how it affects you and your clients.

Have you heard the latest news on the new mortgage rule? Read the Financial Post article here. 

1. You are not going to be paying a higher mortgage rate. (You only have to qualify at the higher rate A.K.A. – Stress Test)

2. New rule applies to ALL clients, and ALL mortgages, except if you have a firm approval in place as of December 31st, 2017.

3. The new rules begin January 1st, 2018.

4. This new rule will decrease the amount you can borrow when purchasing a home, or when refinancing to borrow against the value of your home. (sometimes as large as 20% reduction in potential affordability)

 Please call Cathy and Tanya Rocca at The Rocca Sisters & Associates for further details, our team is happy to help educate you on this. 905.335.4102


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