Benchmark Qualifying Rate

This was one of the new rules the Minister of Finance instated April 19, 2010. The Benchmark qualifying rate is the rate lenders will use to qualify borrowers wanting a variable rate mortgage term or fixed rate mortgage term less than 5 years. Most of the time this only applies when you have less than 20% downpayment when purchasing or are borrowing more than 80% of your homes value in the case of a refinance or renewal . So even though you will get best rates, the lender still wants to ensure you qualify when variable rates rise or if rates are higher when you renew your mortgage. The idea behind the new rule is to ensure borrowers have the capacity to handle higher payments. It has been over a year since the new rule came into effect, and we as mortgage brokers would say it has not had a large impact on borrowers that we have noticed.

The benchmark qualifying rate is always changing, contact your mortgage professional for the recent benchmark rate.

If you have any questions, please do not hesitate to contact Martene Woodward, Mortgage Associate with Argentum Mortgages at 866-932-8412 or info@mortgagegirl.ca

Variable Rate Update

The Prime Rate affecting Variable Rate Mortgages will likely not increase until September. The weak US Economy, the strong Canadian dollar and the effects of the government spending on economic growth in Canada all played a role in the May 31st decision to keep Prime Rate the same. Something they will probably do again for the July 19th meeting.

If we start to see economic growth start to increase in the next coming months, which is predicted to happen, rates will rise.

If the Bank of Canada waits too long to raise rates, potential inflation can could lead to an even steeper rate hike in the future. It is easier to digest a couple of small rate increases than 1 really big one. Therefore, it makes sense for rates to start rising in September.

Prime Rate will likely be about 0.75% higher by the end of the year.

If you have a variable rate mortgage and Prime Rate does change, your payment amount will change as well. The good news is; 71% of Canadians factored a potential mortgage payment hike into their monthly budget. See this article in the Financial Post for more the CMHC annual mortgage survey.

Talk to you existing mortgage lender or a mortgage professional for more information or if you have any questions.


Martene Woodward
Mortgage Associate, Argentum Mortgages
P: 866-932-8412