Stress Test Rate Falls to 4.79%
On August 12th, 2020, The Bank of Canada has reduced the stress rate for the second time in the past three months.
The Bank of Canada cut its posted 5-year fixed rate by 15 bps from 4.94% to 4.79%, and all of this happened right after Canada’s six banks decreased their rates as well over the past week.
However, this is not something new; in May, after similar big-bank posted rate reductions, The Bank of Canada rate fell from 10 bps from 5.04% to 4.94%.
What is the Stress Test?
“The Stress Test.” is a test that proves you can afford mortgage payments at a higher interest rate than a lender or a bank is quoting you.
The Canadian Mortgage App is the first-ever app that consolidated the rules into a convenient feature on an app so you can quickly determine the maximum loan you can afford.
How is this cut going to affect me?
In case you are wondering how this change is going to affect you:
According to Paul Taylor, President, and CEO of Mortgage Professionals Canada, “It will make qualifying easier or permit some people to borrow fractionally more money.”
Let’s see with a real example how much more you could afford in your mortgage.
As you can see in the following example, the same person with the same conditions (Gross annual income, property tax, and Heat) would be able to increase his purchase power by 1.48% or $7,470.
Refresh your Pre-Qualification
To see how these changes will affect you, please refresh your information and start a new Pre-Qualification on the app, or make a request to get in contact with the best Mortgage Professional in your area today.