Technology: Central bank qualifying rate used in mortgage stress tests falls - PressFrom - Canada
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TechnologyCentral bank qualifying rate used in mortgage stress tests falls

07:20  21 july  2019
07:20  21 july  2019 Source:   msn.com

CMHC defends mortgage stress test changes amid calls for loosening rules

CMHC defends mortgage stress test changes amid calls for loosening rules The CEO of Canada Mortgage and Housing Corporation is forcefully defending mortgage stress test rules and warning federal policy-makers to hold the line amid calls for softening the measure from industry associations. "My job is to advise you against this reckless myopia and protect our economy from potentially tragic consequences," wrote president and CEO Evan Siddall in a letter dated Thursday to the Standing Committee on Finance. He urged the committee to "look past the plain self-interest" of the parties lobbying for easing the changed rules and implementing other measures, like offering mortgage terms of 30 years.

The Bank of Canada's rate used by mortgage stress tests to determine whether would-be homeowners can qualify has dropped for the first time As of Jan. 1, 2018, to qualify for an uninsured mortgage borrowers needed to prove they could still make payments at a qualifying rate of the

The qualifying rate is used in stress tests for both insured and uninsured mortgages , and a lower rate means it is easier for borrowers to qualify . "This 15 basis point drop in the qualifying rate will not turn the housing market around in the hardest-hit regions, but it will be an incremental positive

Central bank qualifying rate used in mortgage stress tests falls© Provided by Canadian Press Enterprises Inc

OTTAWA — The Bank of Canada's rate used by mortgage stress tests to determine whether would-be homeowners can qualify has dropped for the first time in three years.

The central bank's five-year benchmark qualifying rate is now 5.19 per cent, down from 5.34 per cent. It's the first decrease in the five-year fixed mortgage rate since September 2016, when it dropped from 4.74 per cent to 4.64 per cent, and increased steadily since.

The qualifying rate is used in stress tests for both insured and uninsured mortgages, and a lower rate means it is easier for borrowers to qualify.

Bank of Canada holds rate, says numbers reinforcing view slowdown was temporary

Bank of Canada holds rate, says numbers reinforcing view slowdown was temporary Bank of Canada holds rate, says numbers reinforcing view slowdown was temporary

OTTAWA — The Bank of Canada's rate used by mortgage stress tests to determine whether would-be homeowners can qualify has dropped for the first time in three years. The central bank 's five-year benchmark qualifying rate is now 5.19 per cent, down from 5.34 per cent.

OTTAWA — The Bank of Canada has lowered the rate used by mortgage stress tests to determine whether would-be homeowners can qualify , marking the first drop in three years.The central bank 's five-year benchmark qualifying rate is now 5.14 per cent

"This 15 basis point drop in the qualifying rate will not turn the housing market around in the hardest-hit regions, but it will be an incremental positive psychological boost for buyers," said Sherry Cooper, chief economist for Dominion Lending Centres in a statement. "It should also counter, in some small part, what's been the slowest lending growth in five years."

The Bank of Canada's five-year benchmark rate is calculated using the posted rates at the Big Six Banks.

Home sales softened last year after the federal government introduced new stress test rules for uninsured mortgages, or those with a down payment of more than 20 per cent, and mortgage rates inched higher.

These stress tests require potential homebuyers to show they would still be able to make mortgage payments if faced with higher interest rates or less income.

'Pretty cheap money': Canadian mortgage rates falling to their lowest level in 2 years

'Pretty cheap money': Canadian mortgage rates falling to their lowest level in 2 years House prices may be as high as ever in many parts of the country, but Canadian homebuyers are being offered some of the lowest mortgage rates seen in years as lenders battle to drum up new business. Rates on a standard five-year fixed-rate mortgage have fallen to their lowest level in two years, according to rate comparison website, Ratehub.ca. Borrowers just about everywhere across the country can take their pick of offerings well below three per cent at the moment, says James Laird, the site's co-founder and president of mortgage brokerage, CanWise Financial.

The qualifying rate is used in stress tests for both insured and uninsured mortgages , and a lower rate means it is easier for borrowers to qualify . “This 15 basis point drop in the qualifying rate will not turn the housing market around in the hardest-hit regions, but it will be an incremental positive

Central bank qualifying rate used in mortgage stress tests falls https www.ctvnews.ca/business/ central - bank - qualifying - rate - used - in - mortgage - stress - tests - falls -1.4515144?utm_campaign=trueAnthem%3A+Trending+Content&utm_content=5d32a6f0b9415600019b092f

As of Jan. 1, 2018, to qualify for an uninsured mortgage borrowers needed to prove they could still make payments at a qualifying rate of the greater of two percentage points higher than the contractual mortgage rate or the central bank's five-year benchmark rate.

An existing stress test already stipulated that homebuyers with less than a 20 per cent down payment seeking an insured mortgage must qualify at the central bank's benchmark five-year mortgage rate.

The federal financial regulator has said that the new, stricter regulations aimed to tighten mortgage lending and take some of the risk out of the market.

Meanwhile, home sales have improved in recent months as mortgage rates have moved lower.

But on Thursday, the Ontario Real Estate Association called for less stringent mortgage rules, saying that policy changes are needed to counter a downward trend in home ownership.

OREA calls on federal finance committee to relax mortgage rules

OREA calls on federal finance committee to relax mortgage rules The Ontario Real Estate Association on Thursday called on the federal government to relax mortgage-lending laws, arguing against what they see as government-imposed barriers to home ownership. The group, which represents the interests of 78,000 Ontario realtors, made the arguments in a letter addressed to the chair of the standing committee on finance, Wayne Easter. OREA’s letter was a response to criticism from Canadian Mortgage and Housing Corporation’s chief executive officer Evan Siddall, who has vocally opposed OREA’s proposals.

The qualifying rate is used in stress tests for both insured and uninsured mortgages , and a lower rate means it is easier for borrowers to qualify . The Bank of Canada’s five-year benchmark rate is calculated using the posted rates at the Big Six Banks . Home sales softened last year after the

The Bank of Canada has lowered the rate used by mortgage stress tests to determine whether would-be homeowners can qualify , marking the first drop in three years.

OREA's chief executive Tim Hudak said in a letter to federal policy-makers that Ottawa should consider restoring 30-year insured mortgages, ease up on the interest rate stress test and eliminate the test altogether for those renewing their mortgage with a different lender.

Borrowers looking to renew their mortgages are subject to stress tests if they switch to a new lender, but not if they stick with their current one.

In a May letter to policy-makers, the chief executive of Canada Mortgage and Housing Corporation defended the stricter lending rules, arguing that "the stress test is doing what it is supposed to do."

The Canadian Press

Note to readers: This is a corrected story. An earlier version had cited an incorrect qualifying rate.

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