The countdown is on for the next Bank of Canada interest-rate announcement after Labour Day. For homeowners, it’s most important for first-time buyers trying to get into the market…and trying to qualify for a mortgage.
However, it may also apply to existing mortgages that are coming up for renewal because, as it stands now, the homeowners holding them also have to qualify. With the stress test, that means qualifying at two per cent more than the lending rate, currently fluctuating close to five per cent.
Or do mortgage holders have to worry?
This month, the Canadian Bankers’ Association released data that more than 99 per cent of Canadian mortgage holders are “in good standing.” As everybody knows, banks like clients with mortgages in good standing, so it’s logical they’d like to keep said clients by making it as easy for them to qualify as possible.
The other reason current and future homeowners are anxious to see what the Bank of Canada is going to do is to see how another mortgage-rate cut might affect the real estate market. When the rate fell in June, there was a modest increase in activity but July’s announcement had little if any impact. That indicates home buyers are still waiting for confirmation that the trend will continue, in addition to a quieter time in the summer holiday months.
The interest rate dropped by 0.25 per cent in June, by another 0.25 per cent in July, and that it will go down by that — or more — come September 4.
In the meantime, the housing market has remained relatively unchanged…or you could put it this way: stable.