Real Estate

Bank of Canada to drop qualifying rate

  • Last Updated:
  • May 25th, 2020 4:53 pm
38 replies
Deal Guru
Feb 29, 2008
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This is interesting considering we had all the news about Canadians racking up debt... I feel like we will see that number come down some more.
Deal Addict
Jul 12, 2008
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GTA
This was done by the banks based on the rules for setting the rate.
Deal Addict
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Jul 8, 2010
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From teh article:
Centum Intouch Mortgage Solutions broker Anthony Venuto sees the lower qualifying rate as being primarily helpful to borrowers are on the verge of receiving funding who still need a slight boost.

“It’s not like a person was going to qualify for $500,000 and all of a sudden they can qualify for $550,000,” he says.

It's a small change to be sure, but in the current environment, says BMO chief economist Doug Porter, every bit helps.

“Any change can make a difference at the margin, even if tiny,” he says. “I believe the much bigger issue for the housing market will be the broader economic outlook and the extent to which activity and jobs can recover as the re-opening progresses. Rates still matter, but much less so than in the recent past.”

At the bottom page of original article, a more worrisome news:

CMHC might trim mortgage underwriting arm

Link
Deal Guru
Feb 29, 2008
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Bears and Bulls can read the same article and have completely different views. What a world Face With Tears Of Joy
Deal Addict
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Jul 8, 2010
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JayLove06 wrote: Bears and Bulls can read the same article and have completely different views. What a world Face With Tears Of Joy
Nah, usually the OP reads only the title... Looks good, let's post it!
Sr. Member
Nov 22, 2017
674 posts
394 upvotes
Meh not a big drop off. They are trying their best to match job market conditions, so that folks aren't negatively affected if their salary is cut a few percent.
Deal Addict
Jun 20, 2011
1950 posts
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VANCOUVER
From the article: "The Bank of Canada is set to reduce its qualifying rate ten basis points, from 5.04 to 4.94 percent". That is only a difference of 0.10%
Deal Guru
Feb 29, 2008
13854 posts
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DDHLeigh wrote: From the article: "The Bank of Canada is set to reduce its qualifying rate ten basis points, from 5.04 to 4.94 percent". That is only a difference of 0.10%
Keep in mind it was at 5.34% a year ago. Also keep in mind many said it was going to go in the opposite direction.
Deal Addict
Jan 17, 2006
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Great news, guys like Isowhat will get more depressed, he was depressed before covid.
Deal Fanatic
Mar 27, 2004
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Toronto
bears are going to disappear.

at first they thought prices will crash. now the bears are saying 6 months from now. 6 months from now they will say another 6 months.

fact is this. prices are actually up in a lot of areas. and certainly still above even nov 2019 pricing. how do I know? because I did like 6 condl deals in the month of Novemeber and each one of those properties are worth more today.

love to hear these prognostications by people who have no idea about the realities.
Full-time Realtor
Sr. Member
Jun 19, 2017
566 posts
840 upvotes
oasis100 wrote: bears are going to disappear.

at first they thought prices will crash. now the bears are saying 6 months from now. 6 months from now they will say another 6 months.

fact is this. prices are actually up in a lot of areas. and certainly still above even nov 2019 pricing. how do I know? because I did like 6 condl deals in the month of Novemeber and each one of those properties are worth more today.

love to hear these prognostications by people who have no idea about the realities.
You may be projecting the future by what you see in the rear view mirror. What prices do in the next 6 months is meaningless unless employment bounces back hard. People don't day trade real estate. RE investing seems like a pretty high risk low reward right now. I hope you're right and I'm wrong.
Deal Expert
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Apr 21, 2004
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Hopefully CMHC doesn't raise down payment to 10% for PRs and Citizens. For outsiders, ban CMHC from insuring those mortgages.
Deal Guru
Feb 29, 2008
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alanbrenton wrote: Hopefully CMHC doesn't raise down payment to 10% for PRs and Citizens. For outsiders, ban CMHC from insuring those mortgages.
CMHC does not insure investment properties.
Deal Addict
Jul 3, 2007
3112 posts
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Toronto
DDHLeigh wrote: From the article: "The Bank of Canada is set to reduce its qualifying rate ten basis points, from 5.04 to 4.94 percent". That is only a difference of 0.10%
in reality it means instead of a $410k mortgage you can get $420k now.... nothing to rave about, but every bit helps I guess

I personally am shopping around right now for detached and seeing some decent deals on the east end pickering / ajax....

but the taxes suck there....
Deal Expert
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Apr 21, 2004
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JayLove06 wrote: CMHC does not insure investment properties.
https://www.cmhc-schl.gc.ca/en/finance- ... -newcomers

Newcomers to Canada are an important and growing segment of Canada’s population, creating new market opportunities. CMHC-insured financing is available to borrowers with permanent and non-permanent residency status.

Specific requirements
Non-permanent residents must be legally authorized to work in Canada (with a work permit). Mortgage loan insurance is limited to the purchase of a 1-unit property, owner-occupied. The minimum down payment is 10% and must be from traditional sources only.

Establishing Creditworthiness
U.S. country of origin: In the absence of a sufficient credit report from a Canadian credit reporting agency, CMHC will obtain an international credit report.

For all other countries: Where the creditworthiness cannot be verified through an international credit record, mortgage professionals should ask the borrower to provide a letter of reference from their financial institution in their country of origin.
Deal Guru
Feb 29, 2008
13854 posts
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alanbrenton wrote: https://www.cmhc-schl.gc.ca/en/finance- ... -newcomers

Newcomers to Canada are an important and growing segment of Canada’s population, creating new market opportunities. CMHC-insured financing is available to borrowers with permanent and non-permanent residency status.

Specific requirements
Non-permanent residents must be legally authorized to work in Canada (with a work permit). Mortgage loan insurance is limited to the purchase of a 1-unit property, owner-occupied. The minimum down payment is 10% and must be from traditional sources only.

Establishing Creditworthiness
U.S. country of origin: In the absence of a sufficient credit report from a Canadian credit reporting agency, CMHC will obtain an international credit report.

For all other countries: Where the creditworthiness cannot be verified through an international credit record, mortgage professionals should ask the borrower to provide a letter of reference from their financial institution in their country of origin.
What does any of that have to do with "CMHC does not insure investment properties"?
Deal Expert
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Apr 21, 2004
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JayLove06 wrote: What does any of that have to do with "CMHC does not insure investment properties"?
What do your replies have to do with my original statement that I wished CMHC would not insure non-PR's? Non-PR's can buy non-investment properties, can't they?

If you are going to quote me ad infinitum, read my posts properly so you can look more brilliant next time.
Last edited by alanbrenton on May 25th, 2020 9:12 am, edited 1 time in total.
[OP]
Deal Fanatic
Feb 22, 2011
9545 posts
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Toronto
Qrewpt wrote: You may be projecting the future by what you see in the rear view mirror. What prices do in the next 6 months is meaningless unless employment bounces back hard. People don't day trade real estate. RE investing seems like a pretty high risk low reward right now. I hope you're right and I'm wrong.
Places that have reopened are extremely busy. I think if anything we will have a period of higher demand/activity for all businesses. Not to mention there won't be international travel so a lot of CAD that was leaving the country before won't be now. And that is on top of $300 billion new CAD that will be floating around.

I won't predict anything as short as 6 months but within a decade the price of all assets will be double.

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