Bank of Canada lowers benchmark mortgage rate for third time in month – National


Canadians looking for housing saw their purchasing power increase this week as the five-year benchmark mortgage rate announced by the Bank of Canada fell for the third time this year, facilitating a key stress test faced by borrowers.The central bank said the rate fell to 4.79 percent, after falling to 4.94 percent in May and 5.04 percent in March.

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James Laird, co-founder of and president of CanWise, said Thursday the lower rates would be a victory for some.

“If you could barely qualify (for a mortgage), now you might qualify for what you were looking for,” he said.

“It’s a decision that will allow you to qualify a little more than before.”

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Mortgage rates have come down in recent weeks.

While most borrowers pay nothing near the posted benchmark rate for a mortgage, this rate is used when evaluating borrowers as part of a financial stress test.

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The check is meant to ensure that homebuyers can make their mortgage payments in the future if rates rise from where they are today. The lower benchmark rate makes the test easier.

According to’s mortgage affordability calculator, a family with an annual income of $ 100,000, a 10% down payment, and a five-year fixed mortgage rate would have qualified for a home valued at $ 523,410 below the rate. qualification of 4.94%. Under the new rate, they can now afford $ 531,230.

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Laird said the rate cut was not a surprise because when underlying rates fell, posted rates finally caught up.

While the decrease will help a lot of people, he classified it as “not a major change”.

“Everyone was eligible for a mortgage without a problem, they are not affected,” he said.

“Anyone who weren’t close to qualifying isn’t affected either. “

© 2020 The Canadian Press


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