Announcement: July 19, 2019 – Canada
The minimum mortgage qualifying rate in Canada has dropped from 5.34% to 5.19% which is the first time it has done this in three years. The new rate by the central bank will have a small impact on mortgage stress levels for those that have uninsured mortgages.
The OSFI’s Residential Mortgage Underwriting Practices and Procedures guideline indicates that the minimum qualifying rate for uninsured mortgages needs to be greater than the contractual mortgage rate or plus 2% of the five-year rate. This rate is published by the Bank of Canada.
Borrowers are tested at whatever rate is the highest. This will make it easier for anyone that has an uninsured mortgage to qualify. This also applies to anyone that needs to switch their lender.
The decrease will take some stress off of first-time homebuyers.
The conventional five-year mortgage rate is determined by the Bank of Canada. These rates are based on the five-year posted rates of the six largest banks.