2018 ushered in a new stress test for borrowers, requiring banks to vet mortgage applications using a minimum qualifying rate (equal to the greater of the Bank of Canada’s five-year benchmark rate, or their contractual rate, + two percentage points), which put a squeeze on what buyers could afford. These tighter regulations were changed from the original stress test introduced in 2016 (for all mortgages with less than 20% down), later changed in 2017 to include all mortgages regardless of the down payment amount.
For the first time since 2016, mortgage stress test rates have lowered from 5.34% to 5.19%! That being said, check with your financial institution or mortgage broker as there may be better deals on mortgage rates out there and you may qualify for more options.
What does this mean for buyers? You have more borrowing power, more property choices! Getting pre-approved before your search will provide some peace of mind and strengthen your offer.
It’s now a little easier to become a property owner. And working with a knowledgeable Realtor will make the search for your perfect home easier still!
Here is another blog I wrote with some helpful info: REAL ESTATE TAXES & MORTGAGE REVIEW.
If you have any questions, or want to start your property search, contact me today!