Real Estate

OSFI adjusts the stress test

  • Last Updated:
  • Apr 10th, 2021 7:25 pm
Sr. Member
User avatar
Jul 30, 2013
912 posts
807 upvotes
GTA
Easy401rider wrote: it will definitely make an impact for some buyers , Government putting a brake on mostly expensive houses and buyers with money without touching the first time buyers and cheaper houses ... First time buyers are untouched but they might wanna hurry for the place they want after July there might be couple of more buyers for the house/condo they want ...
How does it not impact first time buyers, every buyer with a 20%+ downpayment can effectively afford "less house".
If anything, the people that are not as impacted are the two ends (i.e. people with <20% downpayment or those buying mansions...)
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Sr. Member
Dec 25, 2019
917 posts
1280 upvotes
techkid wrote: How does it not impact first time buyers, every buyer with a 20%+ downpayment can effectively afford "less house".
If anything, the people that are not as impacted are the two ends (i.e. people with <20% downpayment or those buying mansions...)
Most first time buyers cant put %20 down ... the ones who can put %20 and more will be impacted .
Newbie
Mar 25, 2021
55 posts
56 upvotes
impact will be only shifting the demand from higher end of market (mainly plus 1 mil) towards cheaper sections (i.e. condos) but won't cool the market in general in my opinion, plus we need to consider the initial surge & rush in demand now because of this announcement until it is finalized,
they are not fixing the problem, they are playing with it like a cat does with her toy, throwing it around!
Deal Addict
Jan 15, 2010
1491 posts
1822 upvotes
Toronto
As far as I'm aware uninsured mortgages are currently stress tested at 4.79%, so it's just a raise in the stress test rate of 45 basis points. Doesn't this unfairly punish normal buyers who just want to avoid CMHC insurance? Couldn't they stipulate this was only for investment properties or something? Why reward someone for buying with less down payment?
Sr. Member
Oct 30, 2017
589 posts
455 upvotes
Toronto
DaMan12 wrote: As far as I'm aware uninsured mortgages are currently stress tested at 4.79%, so it's just a raise in the stress test rate of 45 basis points. Doesn't this unfairly punish normal buyers who just want to avoid CMHC insurance? Couldn't they stipulate this was only for investment properties or something? Why reward someone for buying with less down payment?
There's not heck of a lot that you can buy for a mil in Toronto anyways. Most properties don't qualify for CMHC except the 1 bedroom condos.
Sr. Member
Dec 25, 2019
917 posts
1280 upvotes
MetalGear wrote: There's not heck of a lot that you can buy for a mil in Toronto anyways. Most properties don't qualify for CMHC except the 1 bedroom condos.
its not true , there are over 1000 3 bedroom housing costs less then 1m and over 2000 2 bedroom housing costs less than 1m in just Toronto as per Realtor site . some might go more than 1m , some might go less 1m. still there are many properties to buy...
Deal Fanatic
Jan 15, 2017
5136 posts
5093 upvotes
Ottawa
mao246 wrote: Anyone can dumb this down for me? Let’s say $160k yearly income, 20% down payment. If I were to max out, how much “house” $ did I just lose? (4% buying power confused me so would prefer to see dollar values)

Like I mean if I were to max out my purchase as well. So just wanted to understand max purchase before and after revisions to stress test at 20% dp
Assuming no other debts from about $880 to $850.
Jr. Member
Oct 10, 2020
107 posts
68 upvotes
DaMan12 wrote: So <20% mortgages get stress tested at 4.79% and >20% at 5.25%?
gotta make that CMHC money
Jr. Member
Apr 25, 2017
169 posts
130 upvotes
I think this is just a way to protect the mortgages i.e. higher the stress test rate lower the probability of default. In isolation, I don't think it will make a huge dent in the housing demand as others have mentioned it's a small percentage in affordability. I think what's more interesting is what we can infer from this:
- OSFI thinks the mortgage rates are too low and expects them to go up in the future
- All levels of government are concerned with the housing market but don't know what they can do safely halt the bidding wars
- This will push more people into going to un-regulated lenders and they'll end up paying more interest
Deal Addict
Mar 30, 2017
1162 posts
911 upvotes
ambrokeyo wrote: gotta make that CMHC money
right, make it easier to borrow more money
and
borrowing less is more risky so make it harder to borrow less.

lol CMHC is a clown :facepalm:
profit on 6/23/2021 = 117.61% since 11/10/2020 to be exact😎
Deal Addict
Jan 5, 2020
1020 posts
1460 upvotes
Woww this will have some material impact.

I think this will boost prices for properties under a mil. Anything over a mil will be negatively impacted.

Basically, this will just raise the floor prices for fthb to get in.
Sr. Member
Sep 18, 2008
880 posts
218 upvotes
Woodbridge
Newuserid wrote: Woww this will have some material impact.

I think this will boost prices for properties under a mil. Anything over a mil will be negatively impacted.

Basically, this will just raise the floor prices for fthb to get in.
And since there isn't really anything under a mil, that means base price for any shed anywhere in Canada will be a mill and up...
Deal Addict
Jan 5, 2020
1020 posts
1460 upvotes
DaMan12 wrote: As far as I'm aware uninsured mortgages are currently stress tested at 4.79%, so it's just a raise in the stress test rate of 45 basis points. Doesn't this unfairly punish normal buyers who just want to avoid CMHC insurance? Couldn't they stipulate this was only for investment properties or something? Why reward someone for buying with less down payment?
Keep in mind that high ratio mortgages can only go up to 25 years whereas uninsured mortgages can go up to 30 years. So in terms of obtaining maximum financing, I think having more than 20% down will still result in being able to obtain a higher mortgage. Also, there is no insurance premium which typically gets added to the mortgage.
Member
May 29, 2020
236 posts
380 upvotes
Seems pretty clear they are trying to avoid hurting first time home buyers as they are the most likely to go with sub 20% DP. Though knowing this gvt, it will likely have the opposite effect.
Sr. Member
Sep 18, 2008
880 posts
218 upvotes
Woodbridge
Newuserid wrote: Woww this will have some material impact.

I think this will boost prices for properties under a mil. Anything over a mil will be negatively impacted.

Basically, this will just raise the floor prices for fthb to get in.
Since there isn't already any habitable place left under a mil, this will mean soon any shed in Canada will cost mill and up...
Deal Addict
Mar 30, 2017
1162 posts
911 upvotes
erexa wrote: Since there isn't already any habitable place left under a mil, this will mean soon any shed in Canada will cost mill and up...
condo/townhouse/duplex are not habitable?
profit on 6/23/2021 = 117.61% since 11/10/2020 to be exact😎
Member
Apr 20, 2016
268 posts
251 upvotes
This will have the opposite effect as most of these gov't initiatives do. Those with properties who already have mortgages will not sell as it will be harder to qualify. FTHB will be worse off because the the floor for entry level homes (i.e. condos in the GTA) will go up and they will have to keep renting. What a terrible policy decision...I feel bad for first time buyers.
Deal Addict
Jan 9, 2010
2578 posts
2335 upvotes
This is honestly so stupid. Again they're just looking at the demand side of the equation and absolving themselves of any responsibility on the supply side to either build affordable housing or give incentives to builders to increase supply. This is going to be a drop in the ocean. Also, increasing the stress test is stupid because it's unrealistic to expect that interest rates will reach 5.25% in the forseeable future, so they're basically arbitrarily telling people that they can't buy. They might as well just come out and say that you can't buy if you make less than $X. It's basically the same thing.

Think about all the things that they're doing. They basically want to have their cake and eat it too. Borrowing so that they spend like drunken sailors to the point where they have a vested interest to keep rates artificially low and bringing in record levels of immigration to increase the tax base so that they can continue to spend like drunken sailors on their beloved social programs like subsidized childcare, pharmacare, UBI, etc. etc. However, despite their drunken spending and addiction to debt, they're telling the rest of the country that they can't borrow, even though they've already instituted a stress test at an interest level that realistically won't be met for the forseeable future (4.79%).

The hypocrisy is astounding.
Jr. Member
Dec 2, 2007
182 posts
127 upvotes
Toronto
Easy401rider wrote: yes exactly , this will target buyers , investors with %20 and more downpayment . also anybody buying a 1m+ house will be effected since they have to put %20 downpayment because CMHC doesnt insure houses more than 1m....it will definitely effect the market , not in a big way. mostly moving up ppl , investors and ppl with lots of money. First time buyers usually bring less than %20 downpayment anyways . this might put more pressure for cheaper condos and houses in the market since there will be more buyers for them ...
houses in Scarborough will benefit, a place where you can buy 1-1.2M detached house in Toronto.
Jr. Member
Jul 10, 2020
164 posts
207 upvotes
So the price of parking lots in GTA going up?
RFD is hurting my wallet, too many good deals *link removed - advertising is not permitted*

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