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Mortgage Stress: Contained Nationally, Toronto Pressured | Your Mortgage Minute · Your Mortgage Minute | Onlendhub

• 0:15
  SPEAKER_00: Welcome to another episode of Your Mortgage Minute.
• 0:18
  SPEAKER_00: I am Sarah, your co-host with our mortgage expert Mooley here in the studio.
• 0:23
  SPEAKER_00: Let's do the regional mortgage checkup.
• 0:25
  SPEAKER_00: CMHC says mortgage stress is contained nationally, but pressures are building in southern Ontario, Toronto included.
• 0:34
  SPEAKER_00: After the reported October 28th Bank of Canada hike, I'm done with hike forecasts.
• 0:39
  SPEAKER_00: I want to split the national headline from what GTA borrowers are actually dealing with.
• 0:45
  SPEAKER_00: The national story sounds calm, the regional one isn't.
• 0:49
  SPEAKER_01: Fair.
• 0:53
  SPEAKER_01: The piece is qualitative and conditional.
• 0:56
  SPEAKER_01: It hangs on the economy and unemployment.
• 0:59
  SPEAKER_01: It's not a borrower-level threshold, and it's not a payment estimate.
• 1:03
  SPEAKER_01: Contained nationally doesn't mean every household's fine.
• 1:07
  SPEAKER_00: Sure, but if the national picture's contained, doesn't zeroing in on Toronto sound like cherry-picking the bad news?
• 1:15
  SPEAKER_01: Not really.
• 1:17
  SPEAKER_01: CMHC itself points to Southern Ontario, including Toronto, as the pressured region.
• 1:23
  SPEAKER_01: That's not the same as saying every GTA borrower is in trouble.
• 1:27
  SPEAKER_01: It means the national headline and the local experience are two different conversations.
• 1:33
  SPEAKER_00: Okay, so what actually changed with the reported hike?
• 1:38
  SPEAKER_01: Secondary reports say the Bank of Canada raised the overnight rate to 2.50% from 2.25% on October 28th, and major banks reportedly lifted Prime to 4.70%.
• 1:52
  SPEAKER_01: There's no primary Bank of Canada release behind that, so treat it as reported.
• 1:57
  SPEAKER_01: First to move are the costs tied to Prime.
• 2:01
  SPEAKER_00: So variable rates and HELOCs.
• 2:04
  SPEAKER_01: Right.
• 2:05
  SPEAKER_01: Fixed offers can move with bond yields, the five-year especially.
• 2:09
  SPEAKER_01: A brokerage update had the five-year Government of Canada yield near 3.50 to 3.54%.
• 2:16
  SPEAKER_01: That's commentary, not an official yield series.
• 2:20
  SPEAKER_00: And renewals are the quiet part, right?
• 2:23
  SPEAKER_01: Yeah.
• 2:24
  SPEAKER_01: A CD Howe analysis reported in October had the five-year yield climbing to 3.7% from less than 1% as of September 30th.
• 2:34
  SPEAKER_01: That implies higher payments for a lot of 2020 to 2021 renewers, even before the hike.
• 2:41
  SPEAKER_01: It doesn't set anyone's actual payment.
• 2:44
  SPEAKER_00: So can't people just extend the amortization?
• 2:48
  SPEAKER_00: Let's put real numbers on it.
• 2:50
  SPEAKER_00: $480,000 balance.
• 2:52
  SPEAKER_00: Current rate 1.9%.
• 2:55
  SPEAKER_00: Renewal at 4.5%.
• 2:57
  SPEAKER_00: 25 years remaining.
• 2:59
  SPEAKER_00: Canadian semi-annual compounding.
• 3:02
  SPEAKER_00: Monthly payments.
• 3:03
  SPEAKER_01: On those numbers, 2,009 a month now, 2,657 at renewal, 647 more.
• 3:12
  SPEAKER_01: Stretch to 30 years, and it lands at 2,420.
• 3:16
  SPEAKER_01: 236 a month in savings.
• 3:19
  SPEAKER_01: Payment drops, but principle comes down slower.
• 3:23
  SPEAKER_00: Okay.
• 3:23
  SPEAKER_00: Stress test.
• 3:25
  SPEAKER_00: OSFI's minimum qualifying rate for uninsured mortgages is the greater of the contract rate plus two percentage points or 5.25%.
• 3:35
  SPEAKER_00: If that formula applies at 4.5%, the prescribed qualifying rate is 6.5%.
• 3:42
  SPEAKER_00: But does that hit everyone who switches?
• 3:45
  SPEAKER_01: Careful.
• 3:46
  SPEAKER_01: An eligible uninsured straight switch isn't automatically subject to that rate.
• 3:51
  SPEAKER_01: Don't describe it that way.
• 3:53
  SPEAKER_01: Official rules and lender underwriting can differ by transaction.
• 3:57
  SPEAKER_01: And the OSFI page doesn't establish a straight renewal specific rule, so don't infer from silence that no test applies.
• 4:06
  SPEAKER_00: So we can state the formula.
• 4:08
  SPEAKER_00: Just not promise an automatic pass or an automatic hit.
• 4:12
  SPEAKER_01: That's it.
• 4:13
  SPEAKER_01: Transaction details matter.
• 4:16
  SPEAKER_01: The formula is official for uninsured mortgages where it applies.
• 4:20
  SPEAKER_01: Lender underwriting is separate.
• 4:22
  SPEAKER_00: Back to the region.
• 5:11
  SPEAKER_01: That's$48,000 less room.
• 5:14
  SPEAKER_00: Which matters if someone's consolidating debt.
• 5:18
  SPEAKER_01: It does.
• 5:19
  SPEAKER_01: $40,000 consolidated comes with a monthly payment of$221 and total interest of$26,417.
• 5:28
  SPEAKER_01: An appraisal on its own doesn't decide approval though.
• 5:32
  SPEAKER_01: Bottom line then.
• 5:33
  SPEAKER_01: National headline contained.
• 5:36
  SPEAKER_01: Regional checkup, pressured in southern Ontario and Toronto.
• 5:40
  SPEAKER_01: The reported hike hits prime linked costs first.
• 5:43
  SPEAKER_01: Bond yields keep the pressure on fixed rates, and renewals are where all of this actually lands for households.ca.
• 5:55
  SPEAKER_00: See you in another episode next week.
• 5:57
  SPEAKER_00: Until then, have a great week.
• 6:00
  SPEAKER_00: This is educational content only, not financial, legal, or tax advice.