Anyone looking to get pre-approved for a mortgage will soon be qualifying for a higher amount. The Bank of Canada is expected to lower their 5 year mortgage rate to 4.79%, down from the current 4.94%. The Bank of Canada rate is often referred to as the benchmark rate, which is the rate used for mortgage qualification. This means that borrowers are required to qualify as if their payments were at a rate of 4.79%, regardless of the actual rate and payment. This is commonly referred to as the mortgage stress test.

Nothing official has been announced by the Bank of Canada as of yet, but it’s just a matter of time. Their benchmark rate is based on the average posted rate from the big five banks, which was recently lowered to 4.79% across the board. The BOC will soon follow.

How much more can you expect to qualify for?

A $150,000 household income will qualify you for a maximum mortgage of roughly $775,000 @ 4.94%.

At 4.79%, this number would increase by $20,000 to $795,000.

This might not sound like much, but then again, it’s based on a small drop in rate. This can result in the difference between qualifying for the home you love, vs. settling for something below what you had your heart set on.

This drop in qualifying rate will bring it closer to the record low benchmark rate of 4.64%, which is where it was in 2017. Given that there is still downward pressure on mortgage rates, it’s very possible that this rate could drop even further in coming months. Time will tell of course.