Beginning Monday, all insured mortgage applications will be subject to a stress test to ensure that the borrower will still be able to service their loan in the event their situation changes or interest rates rise. Previously, stress tests were not required for fixed-rate mortgages longer than five years.
The federal government said it introduced the change in an attempt to stabilize the country's housing markets, particularly in cities such as Toronto and Vancouver where prices have soared and concerns have arisen that borrowers are stretched too thin.
Newstalk 1010 host Tim Hudak, who is chief executive of the Ontario Real Estate Association, spoke with experts on his show about what it means for first time home buyers who don't have a mortgage yet.
President of the Canadian Real Estate Association Cliff Iverson and Gary Simonsen, who is Chief Executive Officer of CREA and oversees the management of the Association say when applying for the mortgage you'd have to qualify for a higher rate then you'll actually be paying.
They say buyers would be approved at a posted rate, which is 2 per cent higher than the current interest rate.
Iverson and Simonsen also tell first time buyer they may have to adjust the kind of property they are going to buy based on the overall price or secure an additional down payment in order to qualify.
With files from the Canadian Press