According to Statistics Canada, “…The mortgage interest cost index, which measures the change in the interest portion of payments on outstanding mortgage debt, declined 2.7% after falling 3.0% in October.”
“So mortgage debt may not be Finance Minister Jim Flaherty’s biggest concern after all,” states mortgagebrokernews.ca in their Dec. 21st report.
Mortgage rates still LOW
As of December 21, 2010 thirteen Financial Institutions offer 5-year fixed mortgage rates ranging from 3.49% to 4.09% on approved credit.
Twelve of the lenders have 5-year variable rates that range from 2.30% to 2.85% on approved credit.
The qualifying rate is 5.19%.
What this means: A borrower can apply for a variable low rate mortgage or a fixed mortgage that’s less than 5years. However, to be approved, he or she must qualify for the mortgage at the qualifying rate. This gives both borrower and lender some comfort that the payments can be managed if rates were to climb.
Let’s say you applied for a 2.30% variable rate mortgage. The lender would most likely qualify you on the posted qualifying rate of 5.19%.
For all insured mortgages—those with more than 80% loan-to-value-- that are variable or 1 to 4 years fixed, the borrower must qualify for the posted 5-year rate, published weekly by the Bank of Canada.
Qualifying for a Mortgage: Lenders determine that your PITH (principle, interest, taxes and heating costs) do no exceed 32% of your gross income. Your total debts cannot exceed 40% of gross income.
Your credit rating is also an important consideration (typically 620 or better).