Following the Bank of Canada’s recent rate-tightening announcement, many Canadians with 5-year fixed mortgage rates are feeling the knock on impact. Many 5-year uninsured mortgages are now ranging between 3.39% and 3.79%.
The result is that borrowers who secure a rate of 3.25% or higher are stress tested at their contracted rate and an additional 2%, not the Bank of Canada’s mortgage qualifying rate (MQR) of 5.25%.
Both insured and uninsured mortgage borrowers are qualified based on a contract rate plus 2% or 5.25%, whichever is greater depending on an individual’s circumstances. Many Canadians will now face a rate higher than 5.25%, affecting their debt-service ratios.
The consequence is shrunken purchasing power and a tougher time securing financing on the home’s many Canadians hope to buy.
Read the full story here or contact us with your questions or concerns about new mortgage rules in Canada.
Looking for a mortgage or to refinance your home, contact Karla Badillo for any of your mortgage inquiries.