So not only are out luxury homes suffering but now first time home buyers get the shaft! WOW
The bank of Canada announced that as of October 18,2016, any insured mortgage applications (less than 20% down payment) must be qualified at the benchmark rate (today's benchmark rate is 4.64%) for mortgage approval. Currently, only variable mortgages, as well as any term shorter than 5 years are qualified at the benchmark rate while any mortgage 5 years or greater is qualified at the contract rate (actual mortgage rate).
What does this mean?
*If someone is currently pre-approved & they are at their maximum qualifying ability based off the 5 year rate they will need to submit an accepted purchase agreement to the lender(s) no later than October 17th, 2016 to qualify.
*If a pre-approved client (above) does not write an accepted offer by October 17, 2016, the pre-approval will need to be adjusted and the client will likely no longer qualify.
*Today: a household income of $70k would qualify for a purchase price of $450k with a 5% down payment ($22,500) at a 5 year fixed rate of 2.39%
*As of October 18, that same household income would qualify for a purchase of $360k with a 5% down payment ($18k) at the Bank of Canada benchmark rate of 4.64%
Thanks for writing this up Tracy Glover from Axiom Mortgage