On May 14th the Bank of Canada raised their benchmark qualifying rate, also known as the stress test rate. Here is some information on the Bank of Canada stress test rate change and how it affects you.
The rate increased from 5.14% to 5.34%. The rate as been at 5.14% since approximately mid January.
There have been five increases since May of last year, where the rate was at 4.65%.
If waiting since May of last year to purchase a home in Ottawa, when looking at a $500,000 house with 5% down, you would now be able to qualify for a house price of approximately $480,000 now using the current qualifying rate.
This change was put into legislation mainly to ease affordability concerns and mitigate the payment shock that may impact lower term and variable rate customers.
April is usually the start of a spring housing market increase, but this year the new mortgage stress test and rising mortgage rates have continued to be a negative factor. Nationally, data released by the Canadian Real Estate Association showed a 2.9% decline in home sales from March to April to the lowest level in more than five years. Over half of all local housing markets reported less sales, led by the Fraser Valley, Calgary, Ottawa and Montreal.
With the recent changes in the qualifying rate, those with a pre approval in place before the change are welcome to contact me to see what amount you will now qualify for.
Contact me today to learn more about the Bank of Canada stress test rate change and how it affects you.
Andrew Thake is a seasoned mortgage broker with over 15 years of industry experience. He’s assisted more than 2,200 clients in finding their ideal mortgage solutions. Recognized for his excellence, Andrew has received high honours and awards, including the National Rookie of the Year from TD Canada Trust and recognition as a Top 10 Ottawa Mortgage Broker in 2023. He has also been inducted into the Hall of Fame at Dominion Lending Centres and has consistently received their Platinum Award during his tenure as a mortgage broker.
Andrew’s dedication lies in serving his clients and prioritizing their needs with an empathetic approach. Throughout the application process, he provides tailored, informed, and efficient services to ensure the best mortgage solutions for his client’s unique circumstances. The best part of Andrew’s job is when he gets to see the joy on his clients’ faces following their mortgage approval.