With the five-year conventional mortgage rate at a historic low of 4.79%, experts are saying that now might be the right time to secure a mortgage.
In August, the Bank of Canada (BoC) dropped its five-year conventional mortgage rate to 4.79%, following cuts from the country’s six biggest banks. It was the second time in three months that the central bank cut the benchmark rate.
And with the benchmark qualifying rate at a record low, experts are saying that it may be a good time for potential home buyers to enter the market.
Read more: BoC overnight rate remains at effective lower bound of 0.25%
“Over the last few years, rule changes have made it harder for Canadians to qualify, so the recent reductions in the benchmark qualifying rate is welcome news for first-time home buyers hoping to enter the housing market,” said James Laird, co-founder of Ratehub.ca and president of CanWise Financial. “The change to the benchmark qualifying rate will increase home buyers’ affordability by 1.5%.”
Meanwhile, Paul Taylor, president and chief executive officer of Mortgage Professionals Canada, told the Globe and Mail that the new rate will l make qualifying easier, or permit some people to borrow fractionally more.”
“In addition to the lower rates, the lower stress test added about one percent to a buyer’s maximum mortgage amount, depending on the down payment,” said Mark Herman of Mortgage Alliance. “The new rules that have come in and the tighter underwriting guidelines the banks are using have taken away much more than that for the average buyer.”