"It's not an easy market for repeat homebuyers, and certainly not for first-timers.”

That is the assessment of Lisa Gyrba, accredited mortgage professional, about the bump in the minimum rate to qualify for a mortgage starting on June 1st.

As announced last month by the federal government, the new rate of 5.25 per cent, up from 4.79 per cent, is intended to cool the overheated housing market where housing prices continue to soar to meet the high demand.

Lisa GrybaGryba describes the southeast region’s housing market used to be typically balanced, where homes are available often, and sells within a reasonable timeframe near or around the listing price. She reports the recent trend to be totally different.

“What we're seeing is homes are selling very quickly. They're not on the market long at all. The second thing is, we aren't also selling these homes near list price. Often, they're going way above the list price.”

She attributes the large demand to the COVID-19 pandemic restrictions. With travel and other leisure plans canceled, she says a lot of people are turning to invest in real estate.

According to Gryba, “Anybody buying a house in Canada can buy a home multiple times with as little as 5% down payment.” She explains the stress test comes into play when a homebuyer puts up less than 20% for the down payment on a property.

“It doesn't matter what interest rate you're paying on your mortgage. We qualify you, so we pretend that that rate today would go up to 5.25%." She explains that the purpose of passing the stress test is to ensure anyone getting a mortgage will be able to pay it off if rates go up.

She also advises homebuyers to do their due diligence and check all the factors that affect their credit score when applying for a new mortgage.

“Know what needs to happen if you've been affected by COVID, as far as your wage is concerned. Before you just defer payments on your credit cards or on your loans or lines of credit, know what the impact is on your credit score. Know what the impact is If you go apply for a new mortgage.”

Gryba also recommends to prospective homebuyers to get pre-approved first and consider getting a reliable professional.

“Make sure you're dealing with someone who knows what they're doing, because it's very important we take the new contract rate into consideration. And make sure that whichever lender you're dealing with or whatever broker you're dealing with, they have a plan A, B & C in place for you.”