Many lenders are still qualifying borrowers with an above 5% interest rate. According to Bank of Canada the lending rate (Conventional mortgage – 5-year) stands at 4.99%. The same rate is generally used to qualify a borrower who is seeking less than 5 years fixed terms or a variable rate mortgages.
In past such low-ball qualifying rate bonanza did not last for long and this time around it is not likely to stay here for long. This year extraordinary cold winter prevented many home shoppers to actively shop for homes. It is likely that once the weather warms up, shoppers will return.
Bond yields did not show much signs of movement this season but qualifying rates went down – indicating that the lenders are seeking more businesses.
It is a good sign that the spread between the actual rate and qualifying rate is decreasing – likely due to the reason that the policy makers (lenders side) are expecting the future market to head towards a steady growth.