Qualifying Rate Now 6.10%

Mortgage-Qualifying-Rate Effective today, the benchmark qualifying rate for insured high-ratio mortgages jumps from 5.85% to 6.10%.

That means it’s now a bit harder to get approved for a variable-rate or a 1- to 4-year fixed term…if you’re putting down less than 20%. 

People choosing those terms will have to prove they can afford monthly payments based on a 6.10% interest rate.

Some lenders—including the big banks–are also applying the new qualifying rate to conventional mortgages with variable and 1-4 year terms.

We talked to brokers about this over the weekend.  The resounding consensus was that this decision will cost banks market share. Many of the banks’ smaller competitors are still using the same qualifying rates on conventional mortgages that they had before the April 19 rule change. That makes it easier for borrowers with 20% down to meet debt service guidelines, and get approved.

Incidentally, there was some confusion this week about when the qualifying rate would be set. Even though the Bank of Canada updates the posted rate every Wednesday, CMHC will set the qualifying rate on Mondays instead (so the rate is consistent for the whole week).

You’ll find the qualifying rate in the left column of this website—updated every Monday.

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