qualifying mortgage rate announcement
Effective immediately the Qualifying Rate most banks use currently use for High Ratio loans will now be extended to Conventional loans as well.
This means:
. For High Ratio and Conventional mortgages with a fixed
rate term of less than 5 years the qualifying interest rate is the
greater of the Bank of Canada qualifying rate and the contract interest rate
. For High Ratio and Conventional mortgages with a fixed
rate term of 5 years OR Greater, the qualifying interest rate is the
actual interest rate
. For all High Ratio and Conventional adjustable
rate mortgages, regardless of the term, the qualifying interest rate
is the greater of the Bank of Canada qualifying rate, and the contract interest
rate
|
For high ratio and conventional mortgages with a fixed rate term of less than 5 years and for all high ratio and conventional adjustable rate mortgages regardless of the term, the qualifying interest rate is the greater of the Bank of Canada qualifying rate, and the contract interest rate |
WHAT DO ALL THESE CHANGES MEAN FOR A CLIENT THAT WANTS TO PURCHASE A PROPERTY?
Well, the most important aspect of this change is that, from now on, you will need a higher income to qualify for the property than before the OSFI changes.
I will continue to notify you of the Bank of Canada Qualifying Rate through my rate announcements and my TMG Newsletter, as per usual.