NO, THE LONDON ONTARIO REAL ESTATE WORLD AS WE KNOW IT DOESN’T END ON OCTOBER 17

If you are confused about what the changes to the mortgage rules coming up in less than a week mean- you are in good company. My network is full of all kinds of information- some of it great, some of it questionable, and some of it downright misleading.

I’m not a mortgage broker, but I have a pretty good grasp on what the changes will mean to my home buyers and I’m refusing to hit the panic button.

If you want to know how the changes will affect you personally, I strongly urge you to talk to a qualified mortgage specialist (I know some amazing ones- let me know if you need a suggestion).

The bottom line is if you are buying a house with less than 20% down payment- you could be approved for approx 20% less purchase amount.

This is because you will now have to qualify for your mortgage based on a higher interest rate. Interest rates are SUPER low right now, so you can buy a LOT more house with the same income compared to when rates were higher.

One thing to note, the new qualifying rate doesn’t mean you will be paying more, it’s just a new metric they are using to make sure buyers aren’t buying something that they can afford at today’s fantastic rates, but wouldn’t be able to if(when?) rates eventually go up.

My take? I think this actually makes a lot of sense. I would rather see my buyers get a bit less house today than struggle to buy groceries if(when?) rates climb over the next few years.

Please note… I’m not saying that everyone buying close to the top of their price range is going to have difficulty, but having a buffer there for a variable that you have no control over- just makes good sense.

Based on how irresponsible lending can cause massive issues (and if you haven’t seen it- the movie “The Big Short” can lend some insight on THAT issue) these guidelines protect more than just the lenders.

If you are in an active search and these changes affect you, I can completely understand why you want to get in an offer under the old rules. 20% less budget to work when you’ve already been out looking could be a complete gamechanger.

If have other sources of income your lender didn’t/couldn't look at, anticipate your income growing faster than interest rates, or for whatever reason your approval amount was already lower than what you can afford: this will likely feel somewhat unfair and I get it.

However: If you don’t feel ready to buy a house this week? It’s going to be just fine. Ultimately: you’ll save some more money, you’ll adjust your search, and you WILL find something that suits you (and your budget). Don’t forget that we live in one of the most affordable housing markets in Canada. :)

So, if you’re one of my future buyers and I haven’t been "on" you to buy something (ANYTHING) in the next 6 days. That’s why. I trust that when the time is right- things will fall into place. If you want to accelerate your search- I’m game! But I’m not going to tell you the sky is falling- because I really don't think it is.

Ultimately, this is just a metric that lenders are using to gauge risk in lending, and when we expect a lender to pay for 81-95% of a purchase, the reality is that they get to be as careful as they need to be to make sure the borrower can really REALLY afford it.

Home ownership is and will continue to be very possible and realistic, and Southwestern Ontario is an amazing place to take that step. First time look outside your “ideal” areas, and be a bit flexible in your criteria, but what’s the dream? To have the “perfect” house the moment you scrape together your first 5% downpayment? Or to be able to afford to ADD value to your home? Pay off the mortgage faster while rates are still this low? Maybe even take a vacation!

Together, (when you are ready) we can find something affordable, that meets your needs of today and with some careful future planning: build some equity so the next move WON’T be a high ratio (less than 20% down) mortgage..... won’t THAT feel nice?

If anyone you know is concerned about these new rules please feel free to share this post/point of view! And let me know what you think in the comments.