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New Mortgage Rules: The Impact

Benjamin-Tal CIBC economist, Ben Tal, predicts mortgage volumes will fall due to the Finance Department’s new mortgage rules.

Here are his estimates of how overall mortgage originations will be affected:

  • New Rule #1:  Increased qualifying rates on fixed terms less than five years and variable mortgages.  (The new qualifying rate is yet to be determined.)
    • Effect:  5%-6% decrease in overall origination volumes
  • New Rule #2:  5% increase in the down payment requirement when refinancing.  (90% LTV will be the new maximum for refinances. Currently it’s 95%.)
    • Effect:  7%-8% decrease in overall origination volumes
  • New Rule #3:  15% increase in the down payment requirement for rental property financing. (20% will be the minimum down payment for insured rental financing. Currently it’s 5%.)
    • Effect:  2%-3% decrease in overall origination volumes

These new rules are currently scheduled to take effect April 19.

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