CAN YOU HANDLE THE PROJECTED INCREASE IN MORTGAGE RATES?
- johnathanmcquoid
- Jan 17
- 2 min read
Many buyers underestimate how even a small rate increase can impact qualification.
A higher rate affects both monthly payments and the income required to qualify.
Here’s what rising rates really mean for homebuyers 👇
1️⃣ Rate projections show meaningful increases ahead
Some forecasts suggest the 5-year Government of Canada bond could rise more than 1%.
As bond yields increase, fixed mortgage rates follow.
✔️ higher bond yield = higher mortgage rate
✔️ lenders add a fixed margin on top
✔️ even small changes impact affordability
A 1% rate jump can drastically reduce borrowing power.
2️⃣ What today’s costs look like
At current pricing, many buyers qualify comfortably at today’s fixed rates.
✔️ lower monthly payments
✔️ lower income requirement
✔️ greater purchasing power
But this changes quickly when rates rise.
3️⃣ What happens if rates rise 1%?
If fixed rates move up by a full percentage point:
✔️ monthly payment increases
✔️ required income increases
✔️ qualification becomes harder
The same buyer could qualify today but be declined next year.
4️⃣ The stress test makes rising rates tougher
The stress test requires borrowers to qualify at the higher of:
✔️ the benchmark rate OR
✔️ your contract rate + 2%
When rates rise, the stress-test jumps too — tightening approvals even further.
5️⃣ Waiting could reduce your purchasing power
Many buyers think they’re “waiting for the right time,” but rising rates may work against them.
✔️ higher payments
✔️ higher qualifying income
✔️ lower approved mortgage amount
Waiting can mean losing the home you want.
💬 Final Thought
You might qualify comfortably today — but a higher rate tomorrow could reduce your approval or eliminate it entirely.
If you want to know exactly how much rate movement you can handle, message The Frontline Mortgage Group anytime. 💬