Bank of Canada Lowers Stress Test Guidelines
The Bank of Canada has decided to lower the qualifying rate (stress test) from 4.94% to 4.79%. This is the second time the Bank of Canada has decided to lower the rate within the past three months. This will give home buyers almost a 8% raise in purchasing power than the original 5.19% that was posted at the beginning of the year.
What is the stress test? How does it affect a home buyer?
- The stress test is more of a safety protocol put in place to help protect home buyers. The government has implemented this rule to make sure your income can handle slightly increased mortgage payments in the future.
- By lowering the stress test, this allows
home buyers to qualify for a larger mortgage.
Qualified Mortgage Comparison (Possible Scenario)
- In a pre-approval, monthly payments are also considered in the calculation such as strata fees ($250/month), property tax ($1,500/year) and heating costs ($50/month)
- Please note, the option for 5% and 20% downpayment are both on the right side of the table.
- The interest rate used is a 1.90% variable interest rate at one of Canada's largest lender. This is my posted rate before negotiation on your behalf!
- Looking for a new home? Always get pre-approved before you start looking! You'll understand your budget. Save time for your realtor and yourself by shopping within your budget. It's free!!
- There is an increase of almost 8% in purchasing power due to the rate drop by the Bank of Canada
- Homebuyers that did not qualify 6 months ago should take a second look to see if they qualify. This is one of the best times to invest in your future.
- With the overnight rate being at a historic low, it's a great time to take advantage of the low variable interest rate option
Please feel free to call (604) 353 5809 or Email at Brandon.Nishi@Cleartrust.ca for a free, no obligations pre-approval and inquiry.