Five-year fixed mortgage rate in Canada falls to 1.99% for first time

In the first quarter, 96.6 per cent of default-insurers borrowers chose a fixed rate, said the Canada Mortgage and Housing Corp.

Last week the government-backed Canada Mortgage and Housing Corp said it would tighten rules for offering mortgage insurance from July 1, after forecasting declines of between 9 per cent and 18 per cent in home prices over the next 12 months. The move would make it harder for riskier borrowers, who offer down payments of less than 20 per cent, to access CMHC’s default mortgage insurance.

CMHC is establishing a minimum credit score of 680 instead of the current 600, the group said in an emailed statement. It will also limit total gross debt servicing ratios to its standard requirement of 35 per cent of annual income, compared with a threshold as high as 39 per cent currently, and total debt servicing to 42 per cent versus as much as 44 per cent now.

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