The new minimum qualifying rate for insured mortgages is going to move to a weekly median 5 year fixed insurance rate plus 2 percent. This is very good news for borrowers as they will now have a little power over lenders. However, while the interest rate is getting lower, the price of buying a home is thought to be increasing. There have been mixed viewpoints on whether or not now was the correct time to change these interest rates since the housing market was already suffering. More people will have lower interest rates, but is that enough to warrant purchasing a home that will be more expensive?
- With the new qualifying interest rate, borrowers will have a little more power over lenders as it’ll cost less to borrow.
- When people assumed the interest rate was going to rise, it hurt the housing market and led to a worse market and cheaper real estate profits.
- These interest rate changes are most likely going to increase the prices of homes and that will be interesting considering the market was already somewhat damaged. The rate will be lower, price higher
“Last week, Minister of Finance Bill Morneau announced changes to the benchmark rate used to determine the minimum qualifying rate for insured mortgages. As of April 6th, that rate will be the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications, plus 2%.”