5 Year Fixed 2.69%

5 Year Variable 2.25%

Mortgage gap created by the posted rate leaves homebuyers with a decision to make

Mortgage gap created by the posted rate leaves homebuyers with a decision to make

Date Posted: April 10, 2017

The qualifying rate, which is based on the most common posted rate of the big six banks for a five-year fixed rate mortgage, has been stuck at 4.64% since the government announced the new measures in October 2016. Homebuyers are finding that qualifying with that rate is a heavy burden and creating a huge gap when it comes time to deciding how much you will actually pay, considering consumers can lock in a rate much lower (ex: 2.59%) with today's rates.

With mortgage default insurance required for any homebuyers putting less than 20% down payment and the slight increase in the insurance premiums that have come into effect March 2017, homebuyers are having to re-think how much of a house they can afford.

With many homebuyers now purchasing a home that may be a little less expensive than what they had plan to purchase - What should they do with the extra income they had originally hoped to use to qualify for a more expensive home?

Canadian Mortgage and Housing Corp (CMHC) has just published a how-to guide book for buying a house with a clear message that suggests homebuyers should avoid borrowing as much money as possible from their financial institutions and instead should focus on prepaying their mortgage. 

 

Click here to read the full article on the Financial Post.