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%.
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