Two major Canadian banks, RBC and TD and more recently, CIBC, increased their fixed-rate mortgage rates on Thursday. This increases RBC’s posted five-year fixed mortgage rate from 4.99% to 5.14% and their special offer rate for a five-year fixed with a 25-year amortization from 3.39% to 3.54%. Future increases in these bank rates, the Bank of Canada benchmark rate will impact buyers and the economy especially the recent government regulation introducing a mortgage stress test for all buyers.
The mortgage stress test is based on the bank of Canada’s conventional mortgage 5 year interest rate (currently 4.99%) or two percentages points above the bank’s 5 year special mortgage rates, whatever is higher. This means that as interest rates increase, so will the stress test rate, lowering a buyer’s purchasing power or or ability to qualify for refinancing with other banks.
The CBC video below explains how these changes could impact you...