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3 YEAR 2.79%*

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5 YEAR 2.89%*

5 YEAR Variable 2.90%*

Updated January 3rd, 2020
*Special conditions apply. Interest rates are provided for information purposes only and are subject to change without notice.

Why the mortgage stress test has proved so controversial for first-time homebuyers — and retirees

Why the mortgage stress test has proved so controversial for first-time homebuyers — and retirees
Financial Post ~ November 7th, 2019

Buying a new home is already a stressful experience. With last year’s introduction of a mortgage stress test for all aspiring homeowners, that has only become more so. There are several requirements to meet before a successful application, and the aspiring homeowner must be sure they will be able to meet the monthly payments before applying.

What is it?

The mortgage stress test is designed to ascertain that the applicant is able to keep up with their payments even in the face of changing interest rates. So you will need to qualify at your contracted mortgage interest rate plus two per cent or the Bank of Canada’s five-year benchmark rate, whichever is greater. As of May of this year, the five-year conventional rate is 5.19 per cent, the first drop since May 2018 where it rose to 5.39 per cent.

In real terms, the stress test means that, for example, a borrower with 20 per cent down payment, no debts and an income of $100,000 a year could buy a house worth about $597,000.

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