New Mortgage Rules and the Real Impact on Canadian Homebuyers

With the new rules effective December 15, many Canadians are curious about the impact on home affordability. For example, a home priced at $1,499,999 with a minimum down payment of $124,999.90 will require an insurance premium of $57,750. To qualify for this mortgage, an annual income of approximately $327,000 is necessary based on current interest rates and stress test figures. While this policy aims to expand housing access, the required income for qualification may still place it out of reach for the targeted demographic, leaving it viable mostly for higher earners, like recent medical graduates, rather than for most first-time homebuyers.

Though those able to qualify for a $1.5 million home aren’t the primary target of this policy, middle-income families seeking homes in the $1.05 to $1.2 million range may stand to benefit more. The industry initially advocated for a $1.25 million mortgage cap on high-ratio mortgages, so this increase to $1.5 million is unexpected. However, many experts argue that adjusting the stress test requirements would have the greatest impact. Since the stress test was introduced, higher interest rates have driven many Canadians toward subprime and private lenders, increasing financial strain on middle-income families. While the new policy brings certain benefits, a more flexible stress test could have offered greater accessibility to those needing it most, potentially easing the path for more Canadians into homeownership.