It’s almost hard to believe, but 2018 is winding down and 2019 will soon be upon us. From politics to economics to social right movements and beyond, 2018 was certainly an eventful year on both a local and global scale. Mortgages too saw their fair share of change and activity in Canada. Here’s a rundown of the biggest mortgage news and happenings from 2018.
New mortgage regulations take effect
The beginning of 2018 started out with some really big mortgage news – the introduction of new mortgage regulations in Canada, including a new mortgage stress test. As discussed in a previous blog, according to these new regulations, everyone applying for a mortgage must pass a stress test in order to prove that they can financially handle their mortgage payments if interest rates were to rise. Previously, only borrowers with a down payment of 20 percent or less would be required to pass a mortgage stress test.
Essentially, the stress test mimicked a borrower’s financial situation either with the five-year average posted, or an interest rate that is two percent higher (whichever number is higher). As such, this new stress test requirement made it a little harder to get mortgage approval from a major lender and it also meant that many families could only get approved for less house than they originally wanted.
Mortgage renewals at an all time high
Mortgage renewals were also at an all time high in 2018. According to statistics, nearly half of all existing mortgages in Canada faced renewal this year. Not only were renewals complicated by the fact that there were now new mortgage regulations in place, there was also rising interest rates to contend with. Worried about these increasing rates, many families were wondering whether they should switch from a variable rate mortgage to a fixed rate mortgage. Although opinions varied on this topic, remember that it always comes down to your individual needs and circumstances when choosing the best mortgage solution.
Mortgage approval easier for the self-employed
There was some good news when it came to mortgages this year. The Canadian Mortgage and Housing Corporation (CMHC) made moves to make it easier for self-employed individuals to obtain mortgage approval, including accepting a wider range of supporting documentation in the application process. This definitely marks a step in the right direction as the popularity of freelance and gig economy workers continues to rise in Barrie and beyond. In fact, experts predict that by 2020, approximately 45 percent of workers will fall into the self-employed/freelance category.
When it comes to mortgages, there are always changes, updates and rules and regulations to be aware of. That’s why working with a mortgage specialist who is up to date and aware of changes in the mortgage industry makes good sense. If you’re looking to buy your dream home or condo in Barrie or surrounding areas and need a mortgage that fits your needs, connect with me today at (705) 315-0516 and let’s review your options.