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Stressed About the Mortgage Stress Test?
*New Mortgage Qualification Guidelines* First of all, you might be asking yourself, What is a mortgage Stress Test and how does it affect me? A mortgage stress test was a measure put in place last October by the Federal Government, that would test a borrowers ability to make their mortgage payment at a higher interest rate - a five year fixe rate set by the Bank of Canada, which is referred to as the Canadian Benchmark Rate. the last several years, Canadians have experienced and become accustomed to record low interest rates. However, in anticipation that these low interest rates could not continue long term, the Government implemented a Mortgage Stress Test in order to protect a borrower from a future hike in interest rates. This was to prove that if interest rates were to increase, a borrower could still afford and maintain their household mortgage payment. Although this is no longer new news, the Stress Test is a topic that should be explored by anyone with a mortgage or planning to apply for one. One of the overall outcomes of last years implementation of the Stress Test was a decrease in the qualified borrowing limits for every consumer contributing less than 20% toward their down payment. This change affected all applications requiring mortgage insurance and reduced a buyers purchasing power by about 20%. For example, a buyer that was pre-approved and out shopping for a $450,000 home, now found that home was suddenly out of reach and a $360,000 purchase price maximum was their new reality. Over the course of this past year, we have seen some increase in interest rates but more importantly, stricter qualifying rules and less competition in the mortgage marketplace for many types of loans. With almost a year since the implementation of this initial Stress Test, the Canadian federal government being pleased with the result of this policy change, is now investigating the need for Stress Testing uninsured mortgage loans as well. Uninsured Mortgage Loans are mortgages with down payments greater than 20% of the purchase price. This expected announcement now means that even if you have 20%, 40% or more for a down payment, every mortgage will then have to qualify at the Benchmark Rate. This will change how mortgages will be qualified and approved and will again mean a reduction in purchasing power of approximately 20% for all the buying public, not just first-time home buyers. The Stress Test is used in qualifying for your mortgage before you buy, but what happens when your current mortgage comes to term.what options do you have? Do you have to renew with your current lender or are you able to move to a lower rate with another lender? Mortgage rates are currently climbing from our record lows in 2016, with Prime Rate already having increased by 0.75% this year; and an increase to fixed interest rates close to 1.00% over the last 60 days. Early planning for a new home purchase or a mortgage renewal could save you thousands of dollars in the future! It has never been a better time to work with an Accredited Mortgage Professional, our ability to provide choice, guidance, and support will help you make informed borrowing decisions.
Who are the working women in Canada's top 1%?
Even though working women are now more educated than working men, they are still outnumbered in top income groups, accounting for one in five workers in the top 1% in 2015. Research shows that characteristics such as education, work experience and occupation continue to leave a substantial portion of the overall gender earnings gap unexplained. Some analysts point to the underrepresentation of women in top earnings groups as a further factor contributing to the overall gap. This study provides the first gender-based analysis of workers in the top 1% in Canadathose employed with a total income of $270,900 or more, based on the 2016 Census of Population, and provides new information on the socio-economic characteristics of women who have broken through the glass ceiling. The results of this study will be updated as new information becomes available. Working women in the top 1% are younger and more educated than their male counterparts Working women in the top 1% in 2015 were relatively younger than their male counterparts, and had higher levels of education. Specifically, 74.2% of women had obtained a bachelors degree or more, compared with 70.0% of their male counterparts. Further, women were more likely than their male counterparts to have studied in fields such as health or related fields, social and behavioural sciences and law. Conversely, women in the top 1% were less likely than men to have studied architecture, engineering and related technologies and business, management and public administration.
Bank of Canada maintains overnight rate target at 1 ¾ per cent
The Bank of Canada today maintained its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 2 per cent and the deposit rate is 1 per cent. The global economic expansion continues to moderate, with growth forecast to slow to 3.4 per cent in 2019 from 3.7 per cent in 2018. In particular, growth in the United States remains solid but is expected to slow to a more sustainable pace through 2019. However, there are increasing signs that the US-China trade conflict is weighing on global demand and commodity prices. Global benchmark prices for oil have been about 25 per cent lower than assumed in the October Monetary Policy Report (MPR). The lower prices primarily reflect sustained increases in US oil supply and, more recently, increased worries about global demand. These worries among market participants have also been reflected in bond and equity markets. The drop in global oil prices has a material impact on the Canadian outlook, resulting in lower terms of trade and national income. As well, transportation constraints and rising production have combined to push up oil inventories in the west and exert even more downward pressure on Canadian benchmark prices. While price differentials have narrowed in recent weeks following announced mandatory production cuts in Alberta, investment in Canadas oil sector is projected to weaken further.