Under current OSFI guidelines, what is the minimum qualifying rate for an uninsured mortgage with a 3% contract rate?
Correct Answer
B) 5.25%, because the floor exceeds 3% plus 2%
OSFI sets the minimum qualifying rate for uninsured mortgages as the greater of the contract rate plus 2% or 5.25%. With a 3% contract rate, 3% + 2% = 5.00%, which is below the 5.25% floor, so the borrower must qualify at 5.25%. The 5.25% floor is set by OSFI under Guideline B-20, not by the Bank of Canada.
Why This Is the Correct Answer
This is correct because the minimum qualifying rate is the greater of 3% + 2% (5.00%) or the 5.25% floor. Since 5.25% is higher, the borrower qualifies at 5.25%.
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