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Looking for a Loophole in the New Mortgage Rules?

12 April 2010



Is There a Loophole in the New Mortgage Rules?

The new federal mortgage rules set to come into effect on April 19 apparently have a loophole; a loophole which may actually make it easier for homebuyers to qualify for a mortgage.

Under the new mortgage qualification regulations, homebuyers requiring mortgage insurance must be able to qualify based on a five-year fixed rate mortgage term, regardless of whether or not they intend to take a variable-rate or a shorter fixed-rate term. This was to ensure that mortgage holders could still make payments in the face of rising interest rates. However, lenders seem confused as to what figure to use as a benchmark.

Regardless, the incongruity is that a three-year posted rate mortgage is generally higher than the five-year discounted rate. That’s going to make it easier to qualify for a mortgage, but only if you lock in your rate.

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