Effective June 1, government increases stress test rate, both for insured (low downpayment) and uninsured mortgages. Translates to a reduction in buying power by approximately 4 to 4.5%.
Mad rush to submit offers before deadline, this will be messy. Probably creating even more bumps in prices.
Consensus opinion is this does nothing for helping first time homebuyers. Originally the proposal was only for ‘uninsured’ mortgages (over 20% downpayment), then they sneak in last minute announcement for ‘insured’ mortgages, which is largely first time homebuyers.
Technical details: Stress test is now higher of 5.25% (up from 4.79%) or the contract rate plus 2%.

Bank of Canada will hold current level of policy rate until inflation objective is sustainably achieved, adjusts quantitative easing program.

“There is still considerable excess capacity, and the recovery continues to require extraordinary monetary policy support. We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed. Based on the Bank’s latest projection, this is now expected to happen some time in the second half of 2022.”

Next announcement June 9.

Bank of Canada will hold current level of policy rate until inflation objective is sustainably achieved, continues quantitative easing. Continues to projects absorption of economic slack will not happen until into 2023.

“Despite the stronger near-term outlook, there is still considerable economic slack and a great deal of uncertainty about the evolution of the virus and the path of economic growth”

Next announcement Apr 21.

Despite some rumblings of possible ‘microcuts’, Bank of Canada maintains the rate steady. Your variable rate mortgage remains unchanged. Rates should be low for some time, 2023 is maintained as the current estimate.
“The Bank is maintaining its extraordinary forward guidance, reinforced and supplemented by its quantitative easing (QE) program, which continues at its current pace of at least $4 billion per week.”
Next announcement Mar 10.

Not surprising. Bank of Canada maintains the rate steady. Your variable rate mortgage remains unchanged. Rates should be low for some time, 2023 is the current estimate. “To reinforce this commitment and keep interest rates low across the yield curve, the Bank will continue its quantitative easing program until the recovery is well underway and will adjust it as required to help bring inflation back to target on a sustainable basis.” Next announcement Jan 20.

Bank of Canada maintains the rate steady. This means your variable rate mortgage remains unchanged. Will hold the policy interest rate at the effective lower bound until economic slack is absorbed. ‘In our current projection, this does not happen until into 2023.’ Next scheduled announcement is Dec 9.

Bank of Canada maintains the rate steady. This means your variable rate mortgage remains unchanged. States that it will hold rate at the effective lower bound, until economic slack is absorbed and the inflation target is sustainably achieved. Sounds like rate is not going anywhere.

Next scheduled announcement is Oct 28.

Benchmark ‘stress test’ qualifying rate drops by 0.15% to 4.79%. Means you can qualify for about $5K more average mortgage. Small gesture move, but hopefully moving towards more realistic rate.

“The tests are designed to ensure borrowers will be able to continue to afford their mortgage payments in the event of a future interest rate increase. Maintaining the current qualification requirement is overly burdensome and limits opportunity for many, and appears overly constrictive given the unambiguous guidance given by Bank of Canada Governor Tiff Macklem on July 15: “If you’ve got a mortgage or if you’re considering making a major purchase […] you can be confident rates will be low for a long time.” – Mortgage Professional Canada research

Bank of Canada maintains the rate steady. This means your variable rate mortgage remains unchanged.  The announcement states clearly, this rate is the effective lower bound, will stay until inflation marker reached, and quantitative easing will continue.

“As the economy moves from reopening to recuperation, it will continue to require extraordinary monetary policy support.   This QE program is making borrowing more affordable for households and businesses and will continue until the recovery is well underway. To support the recovery and achieve the inflation objective, the Bank is prepared to provide further monetary stimulus as needed.”

So, best to assume your existing variable rate mortgage rate should not drop further, but skyrocketing rates are not in the near future either.

Next scheduled announcement is Sept 9.

Further assessment by Dominion Lending Centres Chief Economist, Dr. Sherry Cooper  https://dominionlending.ca/news/chief-economist/bank-of-canada-holds-rates-steady-and-continues-qe-program/

Further the to CMHC announcement last week about insured mortgage criteria, Genworth confirms that it has no plans to change its underwriting policy related to debt service ratio limits, minimum credit score and down payment requirements.

Shortly thereafter, Canada Guaranty also confirms that no changes to underwriting policy are contemplated as a result of recent industry announcements.

“Canada Guaranty utilizes a dynamic underwriting process where our underwriting policies are consistently updated to reflect evolving economic environments and emerging mortgage default patterns. This philosophy has resulted in the lowest loss ratio in the industry. Recent insurer announcements relating to down payment and minimum credit score represent a very small component of Canada Guaranty’s business, and we will continue to be prudent in these areas. Given implementation of the qualifying stress test and historic default patterns, Canada Guaranty does not anticipate borrower debt service ratios at time of origination to be a significant predictor of mortgage defaults.”

The competition is on. Let’s see if this translates to benefits to the consumer.