Effective December 15th, 2024, new rule changes will even out the playing field.
Current Rules
Under the current rules, when you apply for a mortgage, you are subject to qualify with the stress test. With the stress test requirement, you are forced to qualify based on the greater of the Benchmark Rate or your given rate +2%. The benchmark today is 5.25% and the average going rate is 4.54%, which means you would be forced to qualify at a rate of 6.54%. Further, when your mortgage comes up for renewal if you are not satisfied with the current lenders renewal rate offering, to move your mortgage for a more competitive rate, you would have to qualify with the stress test, which might mean you won’t qualify and therefore are stuck with the current lenders rate offering.
New Rules
After December 15th, 2024, under the new rules, you will still have to qualify for the original mortgage under the stress test. But what changes, is when your mortgage comes up for renewal, if you are not satisfied with the current lenders rate offering, you will be able to move your mortgage and will have to only qualify for the rate and term you are applying for. For example, with out the stress test, if the new rate you are applying for is 4.54%, this the rate you would be qualifying at.
In conclusion, with the implementation of the new rules, it will even out the playing field amongst lenders and will allow borrowers more options in terms of obtaining the best possible rate for their mortgage. The way it is now, if you are not able to qualify with the stress test, you would be forced to accept a rate offering from your existing lender.
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