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Don't Stress Over the "Stress Test"

Blog by Doriana Zohil-Morton, Broker of Record/Owner | January 12th, 2018

We’ve all heard a lot about the new “Stress Test” that took effect January 1st. But let’s just quickly recap here: the OSFI (Office of the Superintendent of Financial Institutions) now requires that all homebuyers requesting a new mortgage prove that they can actually afford the prime rate set by the Bank of Canada, regardless of whether the mortgage rate they were quoted is lower than prime. They simply look at whether you can afford the prime rate.

This all sounds, well, stressful for people moving to Toronto or any other major city in Canada. But fear not. It’s actually not something to stress over at all. In fact, banks have somewhat performed their own forms of stress tests for years during the mortgage application approval process. Let’s face it, no bank wants their customer to default on their mortgage. And the lending rate is still quite low (anybody remember the 22.75% from 1981?). The lowest on record was 2.25%. So, at the current 3.45%, we are doing pretty good. It is still a great time to buy. Just don’t buy beyond your means.

Will this impact the real estate market? Possibly. Do I still think it’s a good time to buy? Absolutely. The past 12 months have shown us that, despite turmoil in the real estate market, real estate prices still continued to rise. So, the longer you wait, the more the value of houses and condos in the GTA go up. If you are looking to buy your first home or invest in Toronto real estate, upgrade your home, or you are planning a relocation to Toronto, remember... your primary residence is not something you flip. So don’t wait to get into the market. Start now, start small, and stay patient. And please don’t stress about the stress test.

I am an experienced realtor. I know the Toronto real estate market, and can give you honest, educated advice on prices and timing. And I just so happen to be a real estate junkie, so I can help make this process fun. Yes, I said FUN!

If you are looking for executive housing in Toronto, situated in some of the city’s best neighbourhoods, trust one of the top real estate and relocation companies in Canada.

Give me a call to discuss today.