The  changes to rules regarding mortgage approvals will almost certainly mean more buyers locking in to long term fixed rate mortgages.

Under the new rules announced by the Federal Government, buyers will now have to qualify for a mortgage using the posted 5 year fixed rate. In the past, lenders would allow applicants to qualify based on thelowest rate they could find for them, which would most likely have been a variable rate. This is a potential swing of 3 or 4 percentage points, depending on the current variable rate.

There is one way to still get an approval at a lower rate. If you choose to lock in to a 5 year fixed, (the rate that you actually qualify at anyway) the banks will allow you to qualify at the discounted 5 year rate given to their best customers, assuming you are eligible for it. That could be a savings of 1.5-1.75%. I am grateful that the Feds didn’t impose a 10% down payment rule, as that would have made it more difficult for first-time buyers to enter the market. On a $300,000 home, that would have meant an additional $15,000 down payment. The math simply didn’t add up when comparing a home purchased with 5% down vs 10%, if rates were to increase. The affordability difference was minimal, but many first-timers would be left waiting to be to save enough to get in the market.

The Calgary real estate market has seen a 53% increase in listings in the past month, so a shift to the buyers is coming sooner than later. Look for a continuing increase in inventory through summer. Buyers should keep in perspective the historically low rates they are still able to get to buy a home. Calgary has one of the best affordability indexes in the country, and there will be lots to choose from in the coming moths.