06 March 2010

This rate will be set by Bank of Canada each Monday.  Based on this announcement average family with gross annual household income of about $90k would be able to afford $100k less house than today (applying for variable mortgage or fixed term less than 5 years). We will post new details as the situation unfolds.Update: Looks like we will see growing popularity of 5 years fixed, since, for many people, it will be the only possibility to qualify for a mortgage. For 5 years fixed contracts borrowers will qualify on their contract rate (i.e. 3.69%-3.89% today) not on Bank of Canada posted (5.39% as of March 3rd). Moreover, people with 20% or more downpayments most likely will not be affected, since new rules apply only for insured loans (mortgage default insurance provided by CMHC/GE/AIG for mortgages with less than 20% downpayment).

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