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But here’s the rub: That new higher rate, which is intended to create a buffer if rates rise, is ultimately set by Canada’s six largest banks because the BoC rate uses the mode (the most commonly occurring posted rate) of those banks. In theory, two banks changing their posted rate could drive qualification criteria up or down.

“You are putting the people affected by the policy basically in charge of keeping the policy,” said Will Dunnning, an economist, who just published an 18-page report on the various mortgage rule changes and how they might impact the market. Dunning thinks the mortgage rule changes could have a dramatic effect on the economy, slowing it.

The qualification rule doesn’t just hit consumers with down payments of less than 20 per cent, the minimum federal requirement to avoid costly mortgage default insurance: Consumers with a down payment of more than 20 per cent must also meet the rigid new standard of qualifying based on the posted rate if their loans are securitized in a program that is backed by the federal government.

“The setting of the posted mortgage interest rate is an individual business decision made by each bank based on a number of factors including the bank’s funding costs and competition in the marketplace,” said a spokesperson for the Canadian Banker’s Association.

The Bank of Canada says “the typical rate is calculated by taking the rate which is offered most often among the six large banks. If there is an instance in which the mode does not exist, the rate closest to the average (mean) is selected.”