The new mortgage rules that took effect on January 1 now require that all mortgage applicants qualify at a rate that’s two per cent higher than your contracted rate or the Bank of Canada’s five-year benchmark rate, which currently sits at 4.99 per cent. This is to ensure that borrowers will be able to make their mortgage payments should interest rates increase, which is expected to happen this year. This means you’ll have to qualify for the mortgage loan at a rate of 6.99 per cent – even though you’ll only pay at a rate of 4.99 per cent.
As for the effects, it depends on your housing market! Click here to find out how the new rules are expected to impact housing markets from coast to coast.