A borrower applies to a federally regulated bank for an uninsured mortgage with a contract rate of 3.00%. Under OSFI's minimum qualifying rate, at what rate must the borrower qualify?
Correct Answer
C) 5.25%, the OSFI floor rate
OSFI's minimum qualifying rate for uninsured mortgages is the greater of the contract rate plus 2% or 5.25%. Here the contract rate plus 2% is 5.00%, which is below the floor, so the borrower must qualify at 5.25%.
Why This Is the Correct Answer
The rule is "greater of contract + 2% or 5.25%." Contract + 2% = 5.00%, which is less than 5.25%, so the floor of 5.25% applies.
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