What is the a "Stress-Test" and how does it impact Canadians? Over the last few years new mortgage rules were implemented requiring all borrowers to qualify for a mortgage using a "minimum qualifying rate". Rather than obtaining a mortgage approval based on the interest rate offered by a lender, borrowers have to pass a "stress-test" by qualifying at the Bank of Canada's 5 Year Benchmark rate. This lowered the amount a person could qualify for in the hopes that borrowers wouldn't be over extended and could still afford to pay their mortgage should rates go up. For the first time in nearly 3 years, the Benchmark Rate was just lowered to 5.19% from 5.34%. Because of this, a person could borrow more for a home, or someone who couldn't qualify with their debt service ratio based on the previous rate might see an approval with the new minimum qualifying rate.
Ready to buy a home but don't know where to start? The first step is a mortgage pre-approval so you know what price range you should be looking for a home within. Be in touch and I'll happily recommend a Mortgage Specialist!