Article content continued

“The big question is what happens with renewals,” said Rob McLister, the founder of ratespy.com. “We’re not sure if you have an existing loan whether you can port that to a new lender and not have to qualify at the new rate or does everybody who changes lenders have to qualify for the new rate.”

The rate qualification is not the only change. Other key measures that would affect all insured mortgages include a maximum amortization of 25 years, a maximum purchase price below $1 million, only owner-occupied properties being eligible and a total debt service ratio of 44 per cent at the time a loan is approved.

New consumers unable to meet those requirements could be shut out of the market, but even consumers with existing mortgages might be unable to easily switch lenders, leaving them with little ability to negotiate and a higher real interest rate.

McLister said non-bank lenders, which mostly securitize their loans with government backing, could see a steep reduction in business. The government said preliminary estimates are that eight per cent of buyers will be impacted, but McLister said lenders he’s spoken to say it’s likely closer to 40 per cent. Genworth stock finished down 8.7 per cent Tuesday after it disclosed how its business would be impacted.

Ottawa’s move to tighten lending rules was coupled with new requirements to close loopholes it says some buyers were using to avoid paying capital gains tax on the sale of a principal residence, which is not available to non-residents. Beginning with 2016, individuals will have to report in their income tax return the sale of a property for which they claim the principal residence exemption.