• Brandon Nishi

TD First Big Bank to Reduce Mortgage Rate

Due to the recent coronavirus outbreak, investors are looking to put money into government bonds as a safer way to invest.

The conventional 5-year government bond was around 1.60%+ before the coronavirus, and is now dropping to 1.34% after the virus hit.

With TD as one of the first banks to reduce their mortgage stress test to 4.99%, others are watching to do other banks to reduce their bench rate as well.

What does this mean for a homebuyer?

- This means borrowers need approximately 1.8% less income to qualify for a mortgage (Assuming 20% downpayment)

- This will be the first time the stress test dropped below 5% since January 2018

- Although not very impactful change for homebuyers, it is a slowly changing to help improve the improving housing market

Looking to purchase a house in the near future? Think mono-lenders

- Mono-lenders have the same credibility as the large banks. Yet, they have slightly different ways of using the stress test. Whereas most banks must adhere to the +2% stress test posted by the Bank of Canada. Certain lenders have the ability to qualify at rates such as 0.75%.

- This leaves homebuyers more power to purchase, and an opportunity to get a lower interest rate