Home affordability just improved!
Here’s what happened:
- Stress test interest rate changed.
All Mortgage applicants are subject to a “stress test”. This means an applicant needs to qualify for their home at a higher-than-market interest rate.
Yesterday, the stress test interest rate was 5.34%.
Today, the stress test interest rate is 5.19% - Maximum home affordability went up (a little)!
All else being equal, maximum home affordability just edged higher. It’s up about 1.3%.
I don’t consider a increase of 1.3% an earth-shocking change; rather something worth noting. - What this DOES NOT mean.
[] The stress test interest rate DOES NOT change any thing to do with variable interest rates.
[] The stress test interest rate DOES NOT change any actual fixed market interest rates.
If you know someone who was disappointed with their home affordability in the last 12 months (buyers, sellers or renewal/refinance), they might wish to revisit their qualifying again?
I think it is valuable for a second opinion.
Talk soon,
Chad Moore
