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What is the Bank of Canada's Qualifying Rate?

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The Bank of Canada lowered their Qualifying Rate by another .10% to 5.49%, effective today. The qualifying rate is generally used by lenders on most high ratio* deals to qualify:
• A mortgage with any term length of under 5 years
• Variable rate mortgages
• Home Equity Lines of Credit
• 50/50 mortgages

The reason why the Qualifying Rate was implemented is because interest rates have been hovering around at a historic low. Using the increased rate ensures that purchasers have room within their monthly budget to withstand an increase in mortgage payments. Essentially, the Bank of Canada wants Canadians to only be entering into mortgages that are sustainable over the long run for their income.

Every lender has their own set of guidelines for conventional deals (more than 20% down payment).

*a high ratio deal is one that has less than 20% for down payment
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