Recent changes at the federal level to qualifying rates for insured mortgages will have a potential impact on home buyers and on the housing market itself. The new benchmark rate will be the weekly median 5-year-fixed insured rate plus 2%

The addition of the 2%, combined with adjusted mortgage rates, is good news for those looking to up the value of their mortgage amounts says Mitchell Bryce, senior mortgage associate with The Mortgage Group. Bryce is also the co-founder of the Saskatchewan Home Buyers Guide.

“That means that buyers will be able to qualify for more than they actually have in the past. That’s going to result in a slight bump; people would be able to afford approximately 5 percent more than what their current mortgage pre-qualification would be.”

Bryce gives the example of a $400,000 mortgage qualification that would see a potential lift to $420,000. With changes to the 5-year-fixed mortgage rate, the value of that qualification would shift accordingly. Bryce doesn’t see the potential for an increase in the mortgage rates during the next 120 days. 

With the home buyers market having stagnated somewhat due to prices and economic factors, the move should serve to stimulate the home buyers’ market. In areas like Toronto and Vancouver where demand still outstrips supply, it could immediately result in higher home prices. Bryce notes that a larger pool of buyers would logically increase demand, thus in the longer term, raise prices.  

In areas with high volumes of available properties and a market that has flatlined, the new rates may reinvigorate sales without creating an immediate impact on home prices. 

“In places in Saskatchewan like the Humboldt and Watson area, it’s going to be a bit of a slower transition because there is such a large quantity of properties that are available right now. That being said, because these changes will be opening up avenues for new homebuyers to explore, then we might see some of those properties start to get snapped up.”

With a greater number of people able to exit the renters’ world and step up to home ownership, the hope is that the changes may also provide an additional impetus to the development and building of new residential spaces which has slowed significantly in the past few years. 

The new qualifying rates will come into effect on April 6, 2020. Bryce suggests that those who need assistance in considering their options connect with a mortgage specialist and consult the Saskatchewan Home Buyers Guide.