The Bank of Canada qualifying rate for high-ratio mortgages… what it is and where to find it!
The Bank of Canada
As we’ve mentioned it before as well as the news media has batted the ball around enough times over the past few weeks, we’re all aware of the changes on that April 19th brought around. With this in mind, there is a new ‘information source’ that we should have bookmarked in our browsers on our desktops, laptops and data phones: http://www.bankofcanada.ca/en/rates/interest-look.html This page is the Bank of Canada site that will be updated weekly in terms of the BoC’s posted rate changes.
When you’re on the page, scroll down to the row that states: “Conventional Mortgage – 5 year” and check the box for series V121764 (updated weekly). Then scroll back up to the top and in the row that states “2 – quick date” hit the light blue box “get rates”.
The figure that is reflected on the new page is the current high ratio mortgage qualifying rate that our underwriters will be using. Today’s rate (effective since April 28th, 2010) is 6.25%.
To recap this figure’s utility, it is the rate that all mortgage number-crunchers will use as the qualifying rate for high-ratio (a/k/a low downpayment, less than 20%) mortgages. This figure is used as a ‘payment shock’ or ‘acid test’ to ensure that ‘riskier’ borrowers can actually afford not only purchasing a home today but also that they won’t lose it later down the road should they have to refinance in a higher-rate environment. The ‘actual’ rate that mortgage borrowers will pay is still dictated by the ‘best’ or ‘discounted’ rates that are available in the marketplace.
Helping you keep on top of all of the changes in the Canadian mortgage market,
James C. Tworek and the Trimor team!
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Christian, iwspo.net