New Qualifying mortgage Rate vs The Banks
You might have heard the news of the central bank's five year benchmark qualifying rate increasing to 5.34% last week. This qualifying rate will be used in stress tests for both insured and uninsured mortgage. And an increase only means that the bar for borrowers to qualify is even higher....
It's no doubt that the national home sales volume sank to the lowest level in more than 5 years in the month of April, falling by 13.9% from the same month last year. The national average sale price decreased by 11.3% year over year. Home sales have slowed due to factors including the measures introduced by the Ontario government to cool the housing market. Furthermore, higher interest rates and a new financial stress test makes it more difficult for would-be homebuyers to qualify with federally regulated lenders, like the banks.
Speaking of banks..amdist the difficulty of homebuyers to be approved for a mortgage, TD bank has announced that it will be lowering it's five year varible closed rate to 2.45%, or 1.5% lower than its TD mortgage prime rate until May 31st! This move was followed by the Bank of Monteral's announcement of discounting its variable rate to 2.45% until the end of the May. TD Spokesperson, Julie Bellisimo, has stated that its special five year variable rate will apply to new and renewed mortgages, as well as the variable rate term portion of certain TD home equity lines of credit.
Canada's lenders often offer special spring mortgage rates as homebuying activity picks up. However, this year BMO and TD's special offers are considered to be the biggest widely advertised discount ever by a Big Six Canadian Bank!
Since July, the Bank of Canada has raised interest rates three times to 1.25%, adding pressure on consumers. However, a rising interest rate environment also means that the margins on mortgages for banks will improve. Rising these interest rate also drive up demand for fixed rate mortgages and banks may discount variable mortgage rates in an effort to balance the books as seen with TD Bank and The Bank of Montreal.
Have Questions regarding Real Estate? The Iris and Evelyn team are here to help! With their countless years of buying and selling Real Estate Properties, their experience and knowledge can help you make the right choice! Go Canada!
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