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You Can Now Qualify For More Mortgage

The single most important mortgage rate in Canada has finally dropped, years after the last decrease. The mortgage stress test rate, formerly at 5.34% is dropping to 5.19% on July 22, 2019.

The last time this rate was lowered was on September 7, 2016, even while 5-year fixed mortgage rates have been plummeting – even to below 5-year variable rates!

Many in the real estate industry, especially those who have been lobbying for a reduction, will be pleased to see this. Perhaps they’ll wish it went further, though.


How does this change affect my affordability?

Previously, no matter how low your mortgage rate was, you’d have to qualify at 5.34%. For a family with a $75,000 income and a $50,000 down payment, that means they could only qualify for a home worth $422,864. Now, they can qualify for a home worth $428,384. That’s an increase of $5,520, or 1.3%. Not a very large increase, for sure, but every little bit helps.

For borrowers with 20% down, they will see an increase of about 1.4% in affordability.

Borrowers with higher income will see their qualification have that same 1.3 – 1.4% increase, but since they qualify for more naturally, that increase represents a larger price jump. A couple making a combined $150,000 with a $100,000 down payment can now qualify for a home worth $927,255, up from $915,182, an increase of $12,073 (still about 1.3%).


To see what you qualify for now, check out our home affordability calculator.

Chris Chris 07/18/2019
Canadian personal finance buff and all-around writing enthusiast, Chris loves breaking down complicated money ideas to show that they're really not so complex. 
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