During the month of August, the Bank of Canada (BoC) cut its five-year fixed rate for the third time this year, from 4.94% to 4.79%. This rate is also the benchmark qualifying rate for the Canadian mortgage ‘stress test,’ which will make it easier for Canadian borrowers to get approved for a mortgage. Check out these articles to get a quick snapshot of the latest in mortgage news over this past month.
Just recently, the BoC cut its five-year benchmark mortgage rate to 4.79%, which will ease the mortgage ‘stress test’ in place for Canadian borrowers. Our CEO and Co-Founder Jesse Abrams explains that this is great news for home buyers, especially first-time buyers, because this change will increase their overall housing affordability.
In July, the Canadian Mortgage and Housing Corporation (CMHC) attempted to raise its lending standards, but many private lenders didn’t follow suit. CMHC CEO Evan Siddall is now urging lenders across Canada to reconsider offering higher-risk mortgages to overly leveraged buyers in the event of an economic adjustment.
The current pandemic environment has reshaped demand in the Canadian real estate market pushing home prices higher. With a delayed spring market, this resulted in more homes sold in July than any other month on record.
With the six-month deferral programs for many borrowers coming to an end soon, CMHC is currently exploring new tools to help Canadians and prevent mortgages going into arrears as a result of the pandemic.
Our CEO and Co-Founder Jesse Abrams discusses the new lending standards implemented by the CMHC last month and why they might not impact Canadian borrowers as much as many initially thought.