Home Mortgage Rates

Qualifying Rate

Current Inflation

5 Year Bond Yield

Next Bank of Canada Meeting
Mar 8th, 2012

Special conditions apply
Mortgage Rates subject to change.

New mortgage qualifying rules

Working in the mortgage industry is like cruising on a slow moving roller coaster. Just a short while ago I posted details on the New Mortgage Rules but a few questions were left unanswered: What is the new “qualifying rate” and what is considered “speculation“? Well the government finally made up their mind and the new details are as follows:

• The new qualifying rate for mortgage qualification with a LTV (loan to value) over 80% is the bank posted rate for terms less than 5 years or VRM (variable rate mortgages). Over 80% LTV would be considered a high ratio mortgage. In this circumstance, today’s rate would be 5.39% which is much higher than the discounted broker rate. The bank posted rate is the rate banks would previously attempt to sell you until mortgage brokers came into play. Now most banks have smartened up and seldom insult ones intelligence with such high rates. If you are putting 20% or greater down (purchasing), or have 20% or greater equity (refinancing) then this won’t affect you. This all essentially means when purchasing high ratio and choosing a term less than 5 years or a VRM mortgage, when either rate is below the 5 year post rate, you are still required to qualify your income off the new rules: the bank posted 5 year.
• Buying on speculation and having to put a minimum of 20% down is not when you imagine it to be. Speculation in the governments eyes defines the purchase of revenue property, not presale like most of us suspected.