The Mortgage Stress Test Loosens Up
Effective this week, it gets a little easier to buy a house or refinance according to Rate Spy.
On Saturday, BMO and CIBC shaved 15 basis points off their posted 5-year fixed rates. That’s enough to drop the benchmark 5-year posted rate to 4.79%.
Given regulators use this benchmark rate to calculate Canada’s minimum mortgage stress test, today’s cuts mean you’ll now need less income to qualify for a given mortgage amount.
Put another way, it means someone making $70,000 a year can now afford a 1.2% ($4,000) more expensive home with 5% down. That’s not much to get excited about but on a market-wide basis, small buying power improvements are inflationary for home prices, other things equal.
These moves put the benchmark 5-year posted rate just 15 bps above its all-time low of 4.64%. That rate was last seen three years ago in July 2017.
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