May 2022

Fixed Mortgage Rates are rising. The Fed is trying to curb the fast emerging recession, and one of the ways they do this is to raise all kinds of rates.

Benchmark or Stress Test Rate:

As of today's rates, the benchmark or stress test rate is still 5.25%. This is the rate you will have to qualify at, if you choose a variable rate mortgage. Currently you can get a variable rate mortgage for Prime (currently 3.2%) -1%. That means that your rate would be 2.2% (currently).

IF you wanted a five year fixed rate, you would have to qualify at the HIGHER of, the benchmark rate OR the contract rate (5 yr rate) PLUS 2%, whichever is greater. So you would have to qualify for 4.09% PLUS 2% = 6.09%, this is drastically higher than benchmark. It could mean you may have to come up with thousands of dollars more, or much less of a house.

This is why it is so important to get any rate locked in, if you are on the search to buy a new home. Rate holds are only good for 4 months, so as long as that is a good window to find, purchase and move in, it is sufficient.

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In this video I go into greater details: