Canadians rush to get mortgages ahead of tougher tests in new year

The Royal Bank of Canada had seen an increase in demand for mortgages ahead of tougher tests for borrowers being introduced in January.

Canada’s banking regulator last month finalized tougher new rules on mortgage lending aimed at safeguarding lenders and borrowers. The new regulations will go into effect on January 1st and mean that borrowers taking out uninsured mortgages must be stress-tested to determine their ability to make repayments at a rate 200 basis points above their contracted mortgage.

Their pending introduction has led to borrowers rushing to get a mortgage before the stricter tests take effect. The Bank of Nova Scotia said on Tuesday that about 5 per cent of new mortgages would be affected by the rules.

RBC, Canada’s biggest bank by market value, on Wednesday reported fourth-quarter earnings that beat analysts’ forecasts. The bank has beaten market  expectations in each quarter of the past year, brushing off concerns about Canada’s housing markets and record levels of household debt.

These earnings are coming in part from the large increase in demand for mortgages due to the upcoming regulations. If you are worried about whether the new regulations will affect you give us a call at 1 (604) 379-2000