There is some good news that I would like to share. The Bank of Canada has decided to decrease its 5 year benchmark rate to 5.19% from 5.34%. What this means is that the Qualifying Interest Rate for mortgage payments just got easier.
When the mortgage stress test originally came to be the mortgage rules stated that any federally regulated financial institution has to qualify home buyers and owners by using 2% more than the contract rate or the Bank of Canada’s 5 year benchmark rate, whichever is greater. Yesterday, the Bank of Canada decided to decrease this rate to 5.19% since many financial institutions have been dropping their five-year posted mortgage rates.
This is good news since it means interest rates are decreasing which helps affordability in the housing market.
As an independent mortgage professional, it’s important to note that mortgage brokers still work with lenders such as select credit unions who do not have to stress test borrowers. They are not federally regulated so therefore, they can simply use their contract rate to qualify a purchaser or existing homeowner for mortgage financing.
For all of your real estate needs, please do not hesitate to contact me.
Sarah A. Colucci
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By: Sarah Colucci