Increase to the Mortgage Qualifying Rate
The Mortgage Qualifying Rate has risen from 5.14% to 5.34% marking the fifth increase since the summer of 2017.
As a part of the stress test released in January 2018, borrowers are required to qualify on the mortgage qualifying rate (MQR) for high ratio mortgages or the higher of the MQR or the contract rate plus 2% for conventional mortgages. This rate has now increased from 5.14% to 5.34% which makes the fifth increase since the summer of 2017. This may lower the amount Canadians can qualify for. The basic principal behind the stress test mortgage rates is to ensure that borrowers can handle increases in interest rates and still be able to afford their mortgage payments.
“Canada’s big banks have raised mortgage rates in response to higher bond yields and a generally stronger inflationary climate. (The five-year bond yield broke through 2.2 per cent on Wednesday for the first time since mid-2011.) In turn, the BoC’s rate – which is the most frequently occurring five-year, fixed posted rate at the Big Six banks – has risen.”
For more information, click here for the Globe and Mail article.