On March 5, 2010, CMHC communicated to Broker organizations and CMHC-approved Lenders how the “five-year fixed rate” requirement would be implemented by CMHC.
Effective April 19, 2010, the qualifying interest rate used to assess borrower eligibility will change only for loans with a loan to value ratio (LTV) greater than 80 per cent as follows:
Fixed Rate Mortgages and Variable Rate Mortgages: For loans with a fixed rate term of less than 5 years and for all variable rate mortgages, regardless of the term, the qualifying interest rate is the greater of the benchmark rate, and the contract interest rate. For loans with a fixed rate term of 5 years or more, the qualifying interest rate is the contract interest rate.
Mortgages with Multiple Interest Rates (e.g. Multi-Component Mortgages): Each component must be qualified using the applicable criteria defined above.
The “Benchmark rate” is the typical 5-year fixed posted rate of the Big 5 banks. That is 5.39% currently.