In the middle of the uncertainty that has generated this pandemic, this week has brought good news for those looking to buy a new property but specially first-time home buyers due to the official mortgage rate drop announced by the Bank of Canada.
The central bank said that the new mortgage interest rate will apply for a five year period and it comes after 5.04% and 4.96% decrease in March and May respectively.
In regards to this measure James Laird co-founder of RateHub and president of CanWise said “If you just barely couldn’t qualify (for a mortgage), you might now qualify for what you were looking for”.
This new reduction does not come as a surprise in the real estate and financial market, since multiple experts predicted a rate drop close to the ‘all-time low’ of 4.64% that we saw in July 2017.
While most borrowers do not pay anything close to the established rate, this is used when assessing applicants for their financial stress test. This Stress Test will produce a measure of the borrower’s ability to continue paying for their mortgage in case of an increase in the rate.
Last but not least, Reza Sabour who represents the Canadian Mortgage Brokers Association of B.C (CMBA-BC) said that lower mortgage rates should generate a higher demand in the housing market while protecting the prices. Now the question for first-time home buyers is, how far are you willing to drive to qualify for a mortgage?
If these measures generate new questions or if you are considering taking advantage of this new mortgage rate but don’t know where to start contact us. We are here to help and be with you during the whole process.