Hi, how are you,
I have had a few inquires on the upcoming qualifying rate increase expected to kick in on June 1st. We expect this to represent roughly a $40,000.00 reduction in a traditional conventional mortgage approval. This rate increase is only for conventional mortgages and not High Ratio mortgages which will remain at the current 4.79% qualifying rate. Conventional mortgages are purchases of $1,000,000.00 and above, a refinance (taken out equity), or adding an equity line of credit. Overall I don’t see this having a big impact on the real estate market. For a borrower who is right at their limit for borrowing then they would see a reduction but for borrowers who qualify for a larger mortgage than what they need, it is not an issue. Also, as a mortgage broker, we have access to lenders who make exceptions on qualifying limits all the time and there are other product options if the clients need them. A product option that allows higher borrowing limits can come with an increase in the rate but with the current low rate environment, the rates are still very favorable. So my message is not to be concerned about this latest change. The media will make a bigger deal out of it than needs to be.
This low rate environment still presents a great opportunity to switch to a lower rate, refinance to debt consolidate, add on a line of credit or take out equity to renovate your home or for a down payment on another property.
Please reach out to me with any questions.