For all variable-rate mortgages and fixed terms under five years, the new qualifying interest rate will be the greater of:
* the chartered bank 5-year posted rate (5.39% today), and
* the contract rate.
These changes take effect April 19, and are part of the new mortgage rules announced by the Finance Department on February 16.
The posted qualifying rate will be published by the Bank of Canada http://www.bankofcanada.ca/en/index.html each Monday at approximately 12:01am Eastern Time.
Here’s the link: Posted Mortgage Rate http://www.bankofcanada.ca/en/rates/interest-look.html (Look for series V121764.)
Mortgages over five years will use the contract interest rate.
These changes only apply to mortgages over 80% LTV says CMHC, read their announcement here: http://www.cmhc-schl.gc.ca/en/hoficlincl/ .
Currently lenders use qualifying rates at range from discounted 3-year fixed rates (like 3.29% today) to posted 5-year fixed rates (5.39% today).
For mortgages with multiple terms (e.g., hybrid mortgages), each term will be qualified using the applicable criteria above.
Based on recent inquiry levels from concerned borrowers, there may be a rush to get applications in under the old rules.
Please send this email to anyone you know who is thinking of purchasing in the next month or two!
I wish you all the best!Mark
A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
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