Two recent mortgage & real estate policy changes

Two updates:

1) Foreign buyers who are not residents of Canada AT THE TIME they purchased a property will have to pay capital gains taxes when they later sell their Canadian properties from now on. This closes a couple of loop holes that were being used by foreign buyers to avoid the capital gains taxes up until now.

2) Home buyers with less than 20% down payment will now have to confirm more income to qualify for a mortgage than before – instead of qualifying based on a typical fully discounted 5 yr fixed interest rate of 2.49% now, they must qualify based on the Bank of Canada Benchmark rate which currently 4.64% going forward. They don’t pay this higher interest rate, but rather they have to qualify based on it so it will be more difficult for anyone with less than 20% down payment going forward. Inevitably, lenders and the regulators will also very likely apply this same more stringent qualifying criteria to all borrowers, even ones with more than 20% down payment. Stay tuned…