Mortgage Blog
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Bank of Canada first rate cut in 4 years!
June 6, 2024 | Posted by: Dashna Joya
Many buyers have been waiting for a clear sign that rates are going down. Yesterday's announcement confirmed that rate deceleration has started. How quickly and by how much remains to be seen.
For first-time home buyers, especially, this is significant. They might currently be renting at a lower cost than carrying a mortgage along with property taxes and potential maintenance fees.
When rates decrease, affordability increases, allowing more buyers to enter the market. The method used to qualify your mortgage is known as the Stress Test, which means qualifying your mortgage at the five-year benchmark of 5.25% or your contract rate plus 2%, whichever is higher. As rates go down, you can qualify to borrow more money.
Lower stress test rates can be a critical entry point for more buyers. Higher rates have priced out many who couldn’t qualify for the minimum price-point to get into a property, but with lower rates, they may now be able to afford a bigger mortgage amount.
More buyers and higher affordability typically lead to increased property values.
If you are looking to see what the best option is for you and what you can qualify for, please reach out to our team and we can assist you in finding out what you can afford and answer all your questions.
