Under the current B-20 guidelines for uninsured mortgages, what is the minimum qualifying rate that borrowers must be able to demonstrate they can afford?

Question: Under the current B-20 guidelines for uninsured mortgages, what is the minimum qualifying rate that borrowers must be able to demonstrate they can afford?

Answer options: ✅ The higher of the Bank of Canada's five-year conventional mortgage rate or the contractual mortgage rate plus 2%.

• The Bank of Canada's overnight lending rate plus 1%.
• The contractual mortgage interest rate offered by the lender.
• A fixed rate of 5.25% for all mortgages, regardless of contract rate.

Correct answer: The higher of the Bank of Canada's five-year conventional mortgage rate or the contractual mortgage rate plus 2%.

Explanation: The B-20 guidelines, established by the Office of the Superintendent of Financial Institutions (OSFI), require that borrowers for uninsured mortgages qualify at the greater of the Bank of Canada's five-year conventional mortgage rate or their contractual mortgage rate plus two percentage points. This ensures borrowers can manage higher payments if interest rates rise.