The MBABC has confirmed that the following will be the qualifying interest rate on new high ratio mortgage applications as of April 19th.
For loans with a fixed term of less then 5 years and for all variable rate mortgages, regardless of term, the qualifying interest rate is the greater of:
- the benchmark rate
- the contract interest rate
For loans with a fixed term of 5 years or more, the qualifying interest rate is:
- the contract rate
For mortgages with multiple interest rates, each component must be qualified using the applicable criteria defined above.
CMHC defines the benchmark rate as the chartered bank conventional mortgage 5 year rate that is the most recent interest rate published by the Bank of Canada in the series V121764 as of 12:01 am (Eastern Time) each Monday and which can be found at http://bankofcanada .ca/en/rates/interest-look.html.
The MBABC has also confirmed that the following changes will be implemented to CMHC’s Self-Employed Product without Traditional Third Party Validation of Income as of April 9th.
CMHC is reducing the maximum LTV for self employed products without third party validation of income as follows:
- For purchases and portability transactions , the maximum LTV is being reduced from 95% to 90% and
- For refinance transactions, the maximum LTV is being reduced from 90% to 85%