20 January 2011
This is the third mortgage rule tightening in the past three years. One of the reasons is the long period of historically low rates. The deal is that they have provoked a sharp mortgage debt growth.
Last year new rules were implemented. According to them, borrowers had to qualify for a posted five-year fixed-rate mortgage even if they were applying for a variable low-rate mortgage.
CAAMP also studied the influence of higher mortgage interest rates in case the typical rate will be 5% by the end of 2012. It can raise the cost of a fixed-rate mortgage by 1%. The cost of variable-rate mortgage can rise by 2.5%.
The report showed that if the income growth forecasts are true, the majority of borrowers will be able to withstand the rising interest rates.