Christine Buemann Mortgage Broker

As fixed r ates start to inch upward, TD and RBC have both increased their 5 year posted rates 15bps, to 5.14%. The Bank of Canada's Qualifying Rate is a weighted average of the 5 year posted rates so if the remaining big banks implement a similar increase, we can anticipate an increase to the Qualifying Rate in the near future.  www.christinebuemann.ca

What is the Qualifying Rate? The Bank of Canada's Qualifying Rate (also called the Benchmark Rate) is a weighted average of the Big 6 bank's 5 year posted rate. This rate is used to essentially "stress test" in mortgage qualification to ensure borrowers can afford higher payments should their actual interest rate increase. If you are getting an insured mortgage in Canada, meaning putting less than 20% down, you will have to qualify based on this rate. It is important to note that this is not the actual interest rate that you will be paying. This rate is also used to qualify terms shorter than 5 years as well as variable rate mortgages, for those putting more than 20% down. After January 2018, borrowers with more than 20% will be qualified using the greater of this rate, or their actual rate +2%. www.christinebuemann.ca  

The Government has just released the final version of Guideline B-20 . The most significant change that they have added is the "stress test' to uninsured mortgages. What is an uninsured mortgage? One where there is no default insurance secured to the mortgage. If you are putting less than 20% down, your mortgage currently has to be insured through CMHC, Genworth or Canada Guaranty. What most consumers don't realize is that even when putting more than 20% down, many lenders have still been obtaining this default insurance, they just cover the cost it. This is called portfolio insurance and it essentially allows lenders to finance mortgages with lower interest rates to the consumer . As of last year's set of rule changes, the following types of mortgages can no longer be insured: Refinances Rental properties Properties valued over $1M Mortgages with longer than 25 year amortizations Mortgages with 20% down where the contract rate is required to qualify ...

Who:  The Bank of Canada  What:  Qualifying Rate - This rate is a weighted average of the big 5 bank's 5 year posted rates.  It is used to qualify all insured mortgages as well as variable rate mortgages or those with terms shorter than 5 years.  It is not the actual interest rate that the client will receive, simply a rate used for qualifying. Why:  It is essentially a "stress test" to ensure borrowers can afford an increase in payments, should rates go up. When:  Effective immediately. It is important to note that some lenders may honor the old qualifying rate for pre-approvals however  most will require borrowers to qualify at the new, higher rate. If you are pre-approved and currently shopping for a new home, it is important that you consult with your Mortgage Broker to ensure their maximum mortgage amount has not changed. For any questions, please feel free to contact me. Have a great day! www.christinebuemann.ca...

As I have previously mentioned, the new OSFI (Office of the Superintendent of Financial Institutions Canada) changes took effect for most lenders on November 1 st . Here are a few examples of how the changes could affect you: ·          Qualifying rate is going to be used for all variable rate mortgages and terms less than 5 years (previously, some lenders would use a lower rate such as the 3 year fixed rate to qualify conventional mortgages) o    Let’s say you have an annual salary of $50,000 and you are going to get a variable rate, conventional* mortgage. If they could have previously qualified you at a 3 year rate, you would have qualified for approximately $297,000 . Now that they will be using the qualifying rate, you will only qualify for approximately $228,000 * ·          Heat component will be set according to property size (previously most lenders would use $75-$100 a month for he...