12 January 2018

In case more Big Six banks follow the trend, and it’s quite possible, the qualification rate will rise from 4.99% to 5.14% right the next week, making the stress test even stricter.

It should be noted that mortgage borrowers haven’t had to qualify at such high rates since 2008, when there were no government stress tests yet.

Bond traders expect the prime rate to go up by 0.25% after January 17, as markets are pricing in a three-in-four possibility of a rate increase by the central bank on that day.

The main thing now is to ignore all the fuss around it and concentrate on risk management

Ask yourself the following: in case a mortgage rate gains 1%-2% by the time you need to renew, can you afford a 5%-20% payment increase?

If you can, then you may find variable rates of prime minus 1.10 per cent. All variants, which are better than prime minus 0.70%, provide you good enough buffer in today’s situation.

However, if you’re not sure about it, you may consider a five-year fixed rate, which can still be found at a great rate around 3%.