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10 OUR HOUSE WINTER 2018 DOMINION LENDING CENTRES FOUNDATION MORTGAGE RULE CHANGES EXPLAINED F or the second consecutive year, October has brought its own storm clouds to the mortgage industry and homeowner alike. This time, the blast came on Oct. 17 from the O‹ce of Superintendent of Financial Institutions, or OSFI, in the form of tighter rules on mortgages set for Jan. 1, 2018. While there were several changes announced, the biggest a‚ects consumers with uninsured mortgages, who must now undergo a qualifying stress test. More specifically, under the new rules, non-insured mortgage consumers (buyers using a conventional mortgage with a down payment worth 20 per cent or more of the purchase price) must now qualify using a new minimum qualifying rate. The minimum rate will be the greater of the five-year benchmark rate published by the Bank of Canada or the lender's contractual mortgage rate plus two percentage points. The stress test for non-insured mortgages applies to both fixed- and variable-rate mortgages. It should be noted that credit unions are not governed by OSFI and are not subject to these new rules. The new qualifying rules e‚ectively reduce the buying power of a consumer with an uninsured mortgage by 20 per cent, according to industry experts. Paul Taylor, the president and CEO of Mortgage Professionals Canada (MPC), a national association that represents the mortgage industry, described the impact of the new rules as a "purchasing power haircut." And he's concerned just how much impact the new rules will have on the real estate market and economy in general. While Taylor doesn't expect major price reductions in hot markets like Vancouver and Toronto, he suggests it could be more detrimental to struggling economies in other regions of the country like the Prairies and Atlantic Canada. "Reducing the number of people who can a‚ord those homes now is only going to exacerbate the problem," he tells How the latest moves by the federal government to harness the housing boom will a•ect you | By JEREMY DEUTSCH