July 6, 2022

The Queens County Citizen

Complete Canadian News World

Rate hike | Alternative mortgages are gaining popularity

Rate hike |  Alternative mortgages are gaining popularity

(Toronto) Canadian mortgage brokers say home buyers are increasingly looking to credit unions and private lenders for mortgages as rates rise.

Posted 1:03 pm

These experts note that Canadians are now more attracted to these alternative lenders than ever before as fixed mortgage rates in many provinces and territories have reached 4.0% threshold in recent months and slightly exceeded.

Borrowers must now qualify for a mortgage at a higher rate, as the eligibility rate on uninsured mortgages in Canada’s stress test is two percentage points higher than the contract rate, i.e. 5.25%, whichever is higher.

Tsonto-based mortgage broker Sung Lee says interest in mortgages from alternative lenders is growing, as customers looking for a five-year fixed-rate loan should now qualify for 6.0% or 6.5% through traditional lenders.

When these customers visit credit unions, Lee finds that they can only qualify with a one-point point along with their five-year contract rate or contract rate when applying for an adjustable rate mortgage.

Credit unions and private lenders accounted for 3.7% of the country’s mortgages last year, but have already processed 6.7% of activity so far this year, according to insurance and finance website RatesDotka.

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