Last week the major banks all raised their posted rates which initiated an increase by the Bank of Canada on its Benchmark Rate. Effective today, the Bank of Canada has increased its Benchmark Rate from 5.14% to 5.34%. This rate is used as a ‘Stress Test’ on your mortgage application, it will not have any effect on your mortgage rate that you will receive on your mortgage, it will decrease the mortgage you qualify for. 
When purchasing a home with less than 20% down your mortgage application will go through a stress test. What this means is even though your mortgage rate may be 3.34%, you must qualify for the new mortgage at 5.34%, the new Benchmark Rate. The difference in rate is to show that your income can handle a mortgage rate increase (should rates be higher) when your mortgage renews. On mortgages with more than 20% down, your stress test will be either the benchmark rate or your contract mortgage rate + 2.00%, whichever is greater. With this, if your mortgage rate you are receiving is 3.79%, your stress test rate would be used at 5.79% instead of the benchmark rate of 5.34%.
Not all mortgage applications are equal but this increase in rate could lower a persons purchase price of up to $10,000. For more information Call, text or email anytime.
Scott Bourke
Mortgage Broker – Regional Mortgage Group – Mortgage Alliance
403-598-1055 sbourke@regionalmortgage.ca
Alberta Mortgage Information 