Canada's Housing Bubble

Mar 06, 2010 canadianmortgagetrends

For all variable-rate mortgages and fixed terms under five years, the new qualifying interest rate will be the greater of:

• the chartered bank 5-year posted rate (5.39% today), and
• the contract rate.

These changes take effect April 19, and are part of the new mortgage rules announced by the Finance Department on February 16.

The posted qualifying rate will be published by the Bank of Canada each Monday at approximately 12:01am Eastern Time.  Here’s the link:  Posted Mortgage Rate (Look for series V121764.)

Mortgages over five years will use the contract interest rate.

These changes only apply to mortgages over 80% loan-to-value, says CMHC.  Currently lenders use qualifying rates that range from discounted 3-year fixed rates (like 3.29% today) to posted 5-year fixed rates (5.39% today).

For mortgages with multiple terms (e.g., hybrid mortgages), each term will be qualified using the applicable criteria above.

Based on recent inquiry levels from concerned borrowers, there may be a rush to get applications in under the old rules.

More to follow…