Financing Update: Posted Rates are the New Qualifier


Friday, March 12, 2010

There has been speculation as to how the Bank of Canada was going to calculate qualification for mortgages after April 19th. Ultimately they have made the decision that any mortgage with a term of less than 5 years will require the borrower to qualify at the Bank of Canada's posted rate. This only applies to clients if they are obtaining a high ratio mortgage which requires less than 20% down. These rules will not come into effect until April 19th so there is still time for you clients to take advantage of the current rules. These changes will largely affect clients who are looking to try to get into the market by qualifying on a shorter, lower rate term. To give an example, this week the Bank of Canada has posted their 5 year mortgage rate at 5.39%. So a client who trying to qualify on a 3 year fixed rate at 3.25% will soon be required to qualify for the same mortgage at 5.39% which will make it more difficult. The one exception is for clients who are requesting a 5 year term as they can have the choice of qualifying at the Bank of Canada's posted rate or the lending institution contract rate whichever is better at the time.

Information provided by Shaun Pierce, Creative Mortgages
Mike Sandstra

Mike Sandstra

CENTURY 21 Executives Realty Ltd.
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