The Bank of Canada sets a minimum qualifying interest rate for consumers who are applying for a mortgage. This applies to all mortgage terms of less than 5 years.
What this means to you as a consumer is that if you are applying for a mortgage and want to take a 5 year term, you must qualify at the actual rate you are getting from the bank. For example, 3.69%.
However, if you are taking a term of less than 5 years, despite the fact that you may be getting a rate of 3% or 4%, you must be qualified using the Bank of Canada minimum rate. The Bank of Canada Qualifying Rate has decreased to 5.59%, effective Monday May 29, 2011 at 11:59 p.m. ET. That means that you must qualify at 5.59% instead of the actual rate you are getting.
Check this pic out of a unique piece of real estate I found in Cuba which I added just so that this blog post isn't all numbers and no fun.
Robert W May is a Real Estate Broker in Lethbridge Alberta, having now been in the industry for over 23 years. . He was also a licensed Lethbridge mortgage broker and financing expert with Canada First Mortgage of Calgary Alberta for the past 10 years. He is an industry leader always willing to help train and educate others in how to improve their business models for financial and personal benefit.