Survey- Canadians worried about rising interest rates

A new survey says that 20% of Canadians with variable rate mortgages are worried that if interest rates rise they are not sure that they will be able to afford the monthly payments. BMO has suggested that you try the stress test to see. Pick a higher interest rate, figure out the monthly payments and see if it works with your budget. Why are they suggesting this? No one knows how to figure out monthly payments so you will go into a branch and they have an opporuntity to get you as a customer.
What you may not know is that you have already been stress tested at the time you took out your mortgage. Up until this time last year, all variable rate mortgage applicants were tested at the 3 year fixed posted rate. This rate is at least double the variable rate and often 2 1/2 times as great. Last year, Jim Flaherty changed that to the 5 year fixed posted rate. The present 5 year fixed rate is 5.44%. In order for you to get your present mortgage you had to qualify at this higher rate. Therefore you have been stress tested.
I should add though, that if you live in Vancouver or Victoria, the idea of having your monthly mortgage payment double is a scary thought and I have to wonder if you were councelled by your bank or broker as to the negative aspects of variable rate mortgages.
As a general rule, a person advising you on a mortgage should present the positive and the negative aspects of the product so that you can make an iformed choice. Unfortunately, many bankers and mortgage brokers offer you one choice which they have made. This is one reason that CAAMP, the Canadian Association of Acreditted Mortgage Professionals has introduced the AMP designation. Anyone with the AMP accreditation will work for you and not let their personal preferences get in the way. By the way, did you know that Joe or Jane at the bank has not taken a mortgage course and does not belong to your provincial mortgage association? They are bank employees and do not need to take any training or special courses. Scary isn't it?
The author is an accreditted mortgage professional with Mortgage Alliance in Calgary Alberta. Visit his webpage at http://mortgagealliance.ca/davidcooke