Lower Rates Means Less Stress in the “Stress Test” + MORE Jul 23rd

Mortgages in Canada can be a murky subject – one that we hope to shed some light on with a series of highly informational articles.
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Hacks to Slash Your Mortgage and Clear Your Debt Early + MORE Aug 16th

Finding you the best financial practices is what gets us up in the morning. And our staff is a great resource for these ideas. So we polled the staff in our office to ask one simple question:  What mortgage hacks do you use to speed up your mortgage payments? Here are their best tips for getting o.... More »
 Canada mortgage

What You Should Know About Collateral Charge Mortgages + MORE Aug 7th

I recently had clients who were refinancing their mortgage completely reject a very attractive offering from one of the big chartered banks. Their reasoning? All of this bank’s mortgages are registered as collateral charges, and all of their online research into this topic spooked them complet.... More »

Latest in Mortgage News: Why the Fed Cut Rates this Week Aug 4th

The big news of the week was the Federal Reserve’s interest rate cut, the first one since the financial crisis more than 10 years ago. Despite a strong domestic economy, Federal Reserve Chairman Jerome Powell said the cut was a pre-emptive move to brace against “downside risks.” &#.... More »
CMHC Report Shows the Emotional Impact of the Housing Bubble
A June 2019 Housing Market Insight report, from the Canada Mortgage and Housing Corporation (CMHC) has highlighted the impact of bidding wars on property prices over the past two years. The report demonstrates the emotional factors that drive Canadians to stretch their budget and engage in bidding wars, regardless of their self-identified appetite for risk.
The CMHC surveyed more than 65,000 households during the fall of 2018 in an effort to gauge the motivating factors for homebuyers in Vancouver, Montreal, and Toronto – Canada’s largest and most heated housing markets.
More than half the respondents believe foreign investors are helping drive up prices, particularly in Vancouver where 70 percent of people cite foreign investment as an issue. The CMHC report pointed out that in Toronto, homebuyers were aware of the impacts of macro-economic factors and believed those to be more substantial in the cost of housing than other factors.
“Respondents’ perceived traditional fundamental drivers, such as employment growth, interest rate changes and population growth, to be less influential than subjective ones linked to speculation, such as city attractiveness and the presence of foreign investors…

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Lower Rates Means Less Stress in the “Stress Test”
Starting now, Canadian mortgage seekers will find it easier to qualify for more money. That’s because the Bank of Canada has dropped its five year benchmark qualifying rate from 5.34 percent to 5.19 percent. This is the rate banks use to qualify would-be-homebuyers for a mortgage.
This is the first time the rate has dropped since September 2016. Since then the rate has only gone higher. The Bank of Canada posted rate is calculated by using the five year fixed rate at the big six commercial banks.
Why this is significant?
Since January 2018, all Canadians, insured and uninsured, shopping for a new mortgage have to pass the so called “stress test.” Previously only those with less than 20 percent down, or insured mortgages, were subjected to an affordability test. Now everyone has to prove they can pay. Formally called, guideline B-20, it was brought in as a tool to better assess if Canadians could afford rates for the long term, especially if rates were to rise.
Housing slowdown
Real estate sales have slowed and prices are lower since the stress test was implemented…

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