Mortgage Blog
Canada's Mortgage Experts
Mortgage Rule Changes Will Raise Rates
January 3, 2017 | Posted by: Dana Stauber
One of the largely unnoticed factors of the recent change was the effect on low ratio mortgage insurance. It can be a confusing topic, so instead of breaking down what it is and how it works, here's a simplified version of what happened and how it may affect you.
Essentially:
- Ottawa changed the mortgage rules
- The cost of funds will go up for lenders
- Financing options have become a lot more complicated
Ottawa changed the mortgage rules with the supposed goal of slowing down a couple major markets. It’s uncertain whether or not this will succeed. The problem with a national policy to fix an isolated problem is the potential unintended consequence of altering markets which are not experiencing the same amount of growth.
These changes have caused the cost of funds to increase. This means the cost will also go up for consumers. In fact, we have already seen increases in the 0.2% range and up. If the government policy increases the cost of funds, it will always be paid for on the backs of average Canadians.
These changes have made the financing options a lot more complicated and the help of a competent Mortgage professional has become even more critical.
My average lender rate sheet is beginning to look a lot more like a third year calculus paper than a simple list of rates and terms.
The reality is, these changes are here, and it’s my job to help you navigate them. If you have any questions on this or how it will impact your current mortgage, don't hesitate to reach out to me.
