Mortgage, Money and Dream – Our thoughts on Canadian Mortgage Market
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bond-yield-qualifying-rateYesterday BMO moved its special discounted rates up by 0.2%. Today RBC followed the same road. They have jacked up their rates by the same amount. Along with its discounted rates RBC went a step further – it has increased the posted five years fixed rate to 5.34%.

The qualifying rate is the rate Bank of Canada posts in its website as Conventional mortgage – 5-year rate. That rate is used to qualify borrowers who want to take shorter than five years fixed mortgage or a variable rate mortgage.

Bank of Canada regularly polls the big Canadian banks for their posted five years fixed rates and derives the qualifying rate. The qualifying rate is usually the posted five years rate from the majority banks. Scotiabank, historically keeps its posted rate low but somehow that doesn’t influence the BoC conclusion. Posted has been sitting at 5.14% for a while. Now, that will change soon.

Now that RBC has raised its posted rate – it is very likely that TD will follow soon. In a week or two the qualifying rate will go up. If you are looking for a short term option or a variable rate then your income should have that extra room to qualify for the GDS and TDS.