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.