Last week the Bank of Canada changed its mortgage qualifying rate from 4.64% to 4.84%. This rate will continue to be used by all lenders for all conventional (20% or more down) and high ratio (less than 20% down) mortgages on a 25-year term or less. What does this mean for someone looking to purchase a home? It means you will now qualify for slightly less of a mortgage. Here’s an example. Lebron makes $60000 a year, has a $300 per month car payment, credit card debt of $2000, good credit and a 5% down payment. Factoring property tax, monthly heating costs of $100, under the old qualifying rate of 4.64% Lebron would qualify for $280000, under the new rules he would qualify for $275000. There’s a difference of $5000.
As always, if you have any questions please don’t hesitate to reach out. I can easily calculate how much you can spend a property, give you advice on best mortgage products or answer any other questions you may have.
*** Please note that certain lenders will still allow the use of their 5-year fixed rate on conventional mortgages on 30-year terms. If interested please reach out for details.