The rule changes came as a surprise to some, but to us mortgage experts, this is the normal cycle in business that makes us grateful to be experts that lead with clarity. The reality is, the announcement is unpopular because it reduces options for some home buyers.
However, I must ask you to consider the following:
1. If you were considering taking a variable rate or anything but a 5 year fixed term, you were already qualifying at the benchmark rate! That’s right! Until now, a 5-year fixed rate was the only loophole around the higher qualifying rate, so this change will not squeeze as many people’s qualifications as they think. In fact, most of our personally pre-approved clients continue to shop as they were before because they were pre-qualified using the higher benchmark rate to begin with in order to allow for a fluctuation in the market such as this.
2. Built in payment shock avoidance- here is how easy it is to crush your mortgage:
If your minimum payment on a 400k 25-year mortgage is only $1,793.00/month but the qualifying rate payment is $2,256.00/month, imagine this… Put that $463-per-month difference towards your mortgage and after 5 years you only have 13 years and 7 months remaining instead of 20.
3. Don’t forget what happened in 2008! Qualification rates AND the rate you paid were both an average of 5.99%! Today’s qualifying rate is still lower than this. We have a massive opportunity right now to pay down our mortgages with this gift of low rates. Check this out:
A mortgage of $250,000.00 in 1995 at a rate of 10.6% had payments of $2338/month and the total cost of borrowing was $701,361.00.
A mortgage of $500,000.00 today at 2.49% has payments of $2238/month ($100 less than in 1995) and the total cost of borrowing is $671, 203.00 ($30,000.00 LESS than 1995).
4. Opportunities will arise in any market, just as they’ve always done. It’s the professionals and experts with which you align yourself that make all of the difference. As your mortgage experts, we will always help you optimize any market with our ongoing mortgage management strategies.
If you want to learn exactly what opportunities are available for you, my team is personally here to help you with anything related to your mortgage.
Angela Calla, AMP
Dominion Lending Centres-Angela Calla Mortgage Team
Host of The Mortgage Show Saturdays at 7pm on CKNW AM980
Phone: 604-802-3983 Fax: 604-939-8795
“An introduction to someone you care about is a big responsibility…it’s also the biggest compliment a client can give us & it’s not taken lightly. We pledge to treat everyone that is referred to us with the utmost respect & professionalism”.