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New Mortgage Rules

On January 1, 2018, Canada’s already strict mortgage lending rules got even tougher, making it more difficult for those looking to renew or refinance their mortgages. Unlike before, Canadians of every stripe now have to prove that they can handle an interest rate hike that is substantially higher than their current rate.

On top of that, new mortgage rules mean borrowers, even those with a down payment of 20% or more now need to pass a stress test. Before 2018, only those borrowers with a small down payment who needed mortgage insurance had to face a stress test.

This represents the seventh time that the federal government has tightened the country’s mortgage rules since July 2008, severely limiting the amount of debt that Canadians refinance, renew, and borrow.

The new lending rules implemented in 2018 though could have the biggest impact on Canadian homeowners looking to refinance or renew. There is one silver lining for those homeowners who are looking at renewing or refinancing their mortgages: The new, stricter lending rules only apply to federally regulated financial institutions—the rules do not apply to private lenders.