Yes, complex, because the rules aren't being applied evenly. For personal mortgages for your primary home:
1. The new rule requiring qualification at the POSTED 5-year rate officially applies only to those with less than 20% downpayment, and if the term is 4 years or less (or variable).
2. However, the major banks are applying this across the board. Even if you have 50% equity in the home, you still have to qualify at the posted 5-year rate if your term is 4 years or less (or variable).
3. However, this more stringent rule used by the major banks is NOT being adopted by some of the smaller lenders.
4. Places like ING don't even have higher posted rates. Their 4.59% 5-year fixed rate is their "posted" rate. They have no 6.1% rate at all, so who knows how they qualify people. One thing they might do is just qualify everyone at the 4.59% 5-year rate I'm guessing.
5. If the term is 5 years, then whatever special rate you get for a fixed, is what you're qualified at. So you'll qualify for more money with a 5-year fixed than with a 4-year fixed, because with the 4-year fixed you have to qualify at the higher posted rate. Thus there is incentive to choose a 5-year term.
So, in some ways, for primary homes, these rules aren't as super restrictive as they could have been, but they're good enough IMO to slow things down. More important IMO are the increased rules for investment properties.
P.S. Despite all this push for 5-year terms, I just locked into a 3-year fixed last month.
