Real Estate
Mortgage-Qualifying Rate in Canada May Top 8% After Latest Central Bank Hike
Canadian home prices have fallen 10% from their February peak, with previously hot markets including Toronto posting steeper declines.
Photographer: Cole Burston/BloombergThis article is for subscribers only.
The Bank of Canada’s most recent rate hike may force homebuyers to prove they can pay mortgages with interest rates above 8%, another headwind for the country’s cooling housing market.
Canadian regulators require that buyers pass a “stress test” showing that they can afford mortgages with rates that are two percentage points higher than lenders are offering. Major banks’ variable mortgage rates are close to their prime lending rates, which in turn are 2.2 points above the Bank of Canada’s overnight rate.