Benchmark Qualifying Rate

Bank of Canada benchmark qualifying rate is 4.79% as of January 15, 2021.

Bank of Canada overnight rate target is 0.25%.

What is it?

Banks and lenders use benchmark rate to qualify clients for variable mortgages and mortgages with a less than a 5 year term.

For example, lets say you are applying for a variable rate mortgage with a rate of 2.50%.

The lender will review the application at 4.79% instead of the 2.50%, to see if you will be able to make payments in case the interest rates go up.

So, while your actual mortgage rate will be 2.50%, the bank will base their approval of your application on the higher qualifying rate.