12 march 2010
Starting April 19, 2010, the qualifying interest rate for borrower’s eligibility evaluation will change only for loans with a loan-to-value ratio greater than 80%. The changes are the following:
Speaking about Fixed Rate Mortgages and Variable Rate Mortgages, we should note that for loans with a fixed rate term of less than 5 years and for all variable rate mortgages, the qualifying interest rate is the greater of the benchmark rate, and the contract interest rate. In case of loans with a fixed rate term of 5 years or more, the qualifying interest rate is the contract interest rate.
The new rules concerning Mortgages with Multiple Interest Rates require that each component should be qualified using the appropriate criteria (defined above).
The current “Benchmark rate” is 5.39% (It is the 5-year fixed posted rate of the “Big 5” banks).