Mortgage rate hikes at Big Six banks could trigger rise in qualifying rate today

TORONTO — Canada’s Big Six banks have all increased their benchmark fixed-rate mortgage rate, a move analysts say could trigger a rise in the Bank of Canada’s qualifying mortgage rate as early as Wednesday, making it more difficult for some to take on home loans.

The Bank of Nova Scotia on Tuesday became the last of Canada’s biggest lenders to raise its posted rate for a five-year fixed-rate mortgage — from 5.14 per cent to 5.34 per cent. They also increased the posted rates for other fixed-rate term lengths.

Such rates are different from the actual mortgage rates offered by banks to borrowers, which are not seeing the same increases. But the Bank of Canada uses the posted five-year fixed mortgage rates at Canada’s biggest banks to calculate the rate used in stress tests to determine whether borrowers can qualify for both uninsured and insured mortgages.

The central bank’s conventional mortgage five-year rate, which is updated weekly, was 5.14 per cent as of May 2. It posts the rate every Wednesday.

“This will raise the qualifying rate,” said Cormark Securities analyst Meny Grauman.

“On the margin, every time that goes up, you’re excluding more people from being able to get mortgages, all else equal… But people have different strategies to bring themselves on side.”

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