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Stress Test Becomes Less Stressful

Blog by Doriana Zohil-Morton, Broker of Record/Owner | July 24th, 2019

There has been lots of talk surrounding the mortgage “Stress Test” that took effect January 1, 2018. The test requires that all homebuyers requesting a new mortgage (regardless of putting 20% down) prove that they can actually afford the prime rate set by the Bank of Canada. For uninsured home buyers (those with a down payment of 20% or more) the minimum qualifying rate is based on either the Bank of Canada’s 5-year benchmark rate (5.14% in January 2018) or the rate offered by the lender plus 2% – whichever is higher. Buyers with default insured mortgages (those with a down payment of less than 20%) must qualify using either the Bank of Canada'a 5-year benchmark rate, or the rate offered by the lender (without adding the extra 2%) – whichever is higher. However, the 5-year rate spiked to 5.34% in May 2018, where it remained for some time.

So what does the mortgage stress test look like today? Well, the rules are the same. However, the 5-year benchmark rate has dropped to 5.19%. Not quite back to the 5.14% in January 2018, but it definitely opens up the affordability for home buyers. In fact, experts have calculated an added wiggle room of $4,000 for buyers with a yearly income of $50,000, or an extra $8,300 for those earning $100,000 a year. In the world of real estate, that could mean the difference between getting your dream home, or not. So this is excellent news for Toronto real estate and people moving to Toronto.

If you have been toying with the idea of investing in Toronto real estate, or getting your foot in the real estate door as a first time home buyer, now is the time! This is the first time the 5-year benchmark rate has dropped since 2016, so consider this a golden opportunity to make your move. We have been living real estate for over three decades, and we can honestly say that Toronto real estate is strong and an excellent investment. Now is a great time to buy. Don’t wait to get into the market. Start now, start small, and stay patient. We can help. Call us today to discuss: 416-222-0025.



Interested in buying real estate in Toronto & the GTA, or perhaps investing in Toronto real estate? First time home buyer? Moving to Toronto? Are you part of a Toronto relocation with your employer? We can help you with all steps of the process, from finding a new home, temporary accommodations in the meantime, destination services, settling in services, move management, and so much more. So many steps of the move can be handled in advance, so when you arrive we can get you settled much faster. When moving to Toronto, we can help with all aspects of the relocation.

We’d love to hear from you, so call us today to book your complimentary private consultation.


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