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  • Bank Stress Test – How Does it Affect How Much You Can Afford?

  • At Robert Floris’ Mortgage Architects Office in Hamilton, Ontario located on the East Hamilton Mountain, we want our clients and the general public to be the most educated consumers. Banks and other Canadian financial institutions have created a lot of noise regarding new home buyers “stress test”. What does this mean and how does it affect the average Joe. In simple mortgage terms, previously Canadians could purchase a home based on the discounted 5 year fixed rate of 2.69%. Well, the stress test says you can still have the 2.69% rate but ONLY if you can still be approved at the Government of Canada 4.64% stress rate.

    Obviously the effect for the all Canadian mortgagors is that they could now afford less mortgage and less purchase price.

    Here are several examples (all figures approximate):

    Current family income: $50,000

    1. Old Rule: purchasers qualify for $280,000.
    2. New “Stress Test” Rule: purchasers qualify for $224,000.

    Needless to say, the government is trying to add these new mortgage rules to cool down the housing market.

    this will affect many Canadians and subsequently the housing market as well.

    Robert Floris is a mortgage agent located in Hamilton, Ontario, serving the Hamilton, GTA and surrounding areas including Ontario and the rest of Canada. Robert believes in educating the client and letting him/her make their own informed decisions. He believes in honesty and transparency and specializes in debt consolidation, mortgages, refinancing, new home purchases.

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